Soc Gen considering new payments pricing system post-Brexit

French bank may follow British counterparts in reconsidering pricing structures as the UK leaves the European Union

By David Beach | 21 March 2019

Should the UK’s banks reconsider pricing mechanisms as they leave the Single Euro Payments Area (SEPA), Société Générale may follow suit according to the French bank’s deputy head of global transaction banking and payment services, Benoit Desserre.

“The UK by leaving the SEPA area will gain full authority on fixing pricing,” says Desserre. “If we see British banks considering SEPA as an international payment and increasing pricing for that matter, we might just follow up on that, because, of course, it’s a very cheap price we offer for SEPA payments - SEPA was a tremendous pressure on the banks to dramatically lower their pricing."

Desserre was speaking as Soc Gen launched SWIFT gpi in nine new geographies - Germany, Belgium, Spain, Italy, Netherlands, United Kingdom and Switzerland in Europe, as well as Hong Kong and Singapore.

“We’re not going to change our systems, we’re not going to use different core banking systems or a different SWIFT messaging platform. Nothing changes on the IT side, but on the pricing side, yes, potentially it will be reviewed based on what the competition does,” he says.

As Westminster continues negotiations with Brussels over the terms of Brexit, banks have moved to allay business concerns amid the uncertainty. For Desserre, if UK banks decide to increase pricing, it presents an opportunity for Soc Gen to capture more corporate business.

“It is just a question for us of whether we prefer to either increase our pricing or potentially grab more of a market share,” he says.

In an increasingly crowded corporate banking market, Desserre believes SWIFT gpi functionality is “critical” to the bank’s position.

“Gpi is critical in retaining our business within the banking community,” says Dusserre. “It was very important to us to give some sort of payment tracking device to our customers and knowing who would be handling their payments, who’s paying for what and most importantly, how much time it takes.”

SWIFT gpi allows banks to increase processing speed of global payments, greater fee transparency and real-time payment tracking, and Dusserre admits the pressure has been mounting to launch SWIFT gpi.

“Competition was clearly coming from everywhere,” he says. “We’d seen the pressure coming from the regulator to do things in a faster way. We’re seeing pressure coming from our customers to do things better - we were having difficulty striking our payments throughout the world and we were still figuring out where that payment was a couple of days to maybe even a week. That today is a long gone history.”

“We were also pressured from the fintechs, probably the most disruptive player, because, as they’ve done with the FX business, they would have taken over our business if we were not to react,” says Dusserre.

Despite facing pressure on three fronts, Dusserre believes SWIFT gpi was always the solution.

“The question was, should we have done it with somebody else or with SWIFT? We figured out that SWIFT is the only community where we can reach everyone right away. Of course, it takes a bit of time to get everyone onboarded but at least you have all and every single aspect of that community being there for the better as opposed to trying to create a community willing and wishing to invest into a product like that.

“A fintech would have found that very difficult to make live but not completely unrealistic. We figured out it’s better to do it before rather than waiting for somebody to try and grab it from us,” says Dusserre.

According to Wim Raymaekers, global head of banking market at SWIFT, this latest launch gives the network momentum in gpi adoption.

“Since we launched gpi two years ago the enthusiasm and support we have seen for it from our community has been off the charts,” he said by email. “More than 3,500 banks, accounting for 85% of SWIFT’s total payments traffic, have committed to adopting gpi – making it the new standard in global payments, and we are delighted that Societe Generale is part of this continuing momentum.”

Raymaekers also hinted at new developments in the gpi roadmap: “For corporate treasurers with multiple banking partners, we recently launched a multi-bank payments solution that offers them a single view on the status of all their cross-border payments within their own systems and allows them to initiate and track their gpi payments to and from various banks in a single format.”

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