This means increasing the speed, transparency and predictability in cross-border payments. This new initiative, announced yesterday (Dec. 10), was created in tandem with the payments industry, which means it will focus on a B2B payments service. It is anticipated to be supported by participating banks in early 2016, according to a SWIFT news release on the subject.
What this new service will do is enable corporates to expand their international business, improve supplier relationships and achieve greater treasury efficiencies. It will also aim to help those groups receive enhanced payments services directly from their banks, which include these features: same-day use of funds, transparency and predictability of fees, end-to-end payments tracking and the transfer of rich payment information.
“Correspondent banking serves the industry with millions of secure cross-border payments day in, day out; with this initiative, we are building on those strengths, enabling banks to provide distinctive cross-border payments services and providing real benefits to end customers. This is a critical step in cross-border payments innovation,” said Gottfried Leibbrandt, SWIFT’s CEO.
SWIFT’s new initiative will operate on the basis of what the member-owned cooperative calls “business rules” that are “captured in multilateral service level agreements (SLAs) between participating banks.” This means addressing end-customer needs, all while still allowing banks to meet compliance requirements, as well as market, credit and liquidity risk requirements. SWIFT’s release also noted that the new service will operate on SWIFT’s global platform, with participation open to any supervised financial institution that is a member of SWIFT and adheres to its business rules.
“This global payments innovation initiative is a reflection of the strength of the SWIFT community and its ability to collaborate and innovate and deliver a new benchmark in cross-border payments,” said Yawar Shah, SWIFT chairman.
After SWIFT is able to conduct this pilot program, the group plans to enhance the initiative with new technologies. SWIFT will also continually work with industry stakeholders to determine what other SLAs are needed. The overall goal of this plan, according to SWIFT, is to reduce the “costs and frictions arising from compliance, liquidity and processing efficiency considerations involved in cross-border payments.”
“This initiative is an important first step in driving cross-border payments innovation. As part of the initiative, we will continue to develop new and enhanced services, utilizing SWIFT’s Innotribe initiative to further engage the FinTech community and explore the application of innovations, such as real-time payment status tracking, the use of peer-to-peer messaging and blockchain technology,” said Wim Raymaekers, head of banking markets for SWIFT.