Cross-border payments are getting an update—but banks are keeping blockchain in the blockchain labs.
Instead of distributed ledger technology, banks like Citi, Wells Fargo, and BBVA, are looking to projects like SWIFT’s global payments innovation service — or gpi — which went live today, following its January launch.
“If [the technology] isn’t distributed ledger technology, the question is how do we leverage other technologies like cloud computing, APIs, that can run along the existing payment rails,” said Stephen Grainger, Managing Director for SWIFT — a global interbank payments platform. “Gpi is driving innovation across these rails.”
SWIFT gpi enables banks to offer transparent and traceable cross-border payments. Through a Tracker feature, corporate treasurers will have an end-to-end view on the status of their payments, including confirmations when payments have been credited to beneficiaries’ accounts (about time?). At the moment, there are 12 banks exchanging live on the network, including Bank of China and UniCredit, plus more than 100 member-banks, like Citi and Wells.
Presently, these payments are not real-time (this was “not the deliverable,” according to the company), something that is less of a problem for banks’ corporate clients, according to Mark McNulty, global head of financial institutions payments and clearing at Citi Treasury and Trade Solutions.
“There’s a certain use case for real-time payments—maybe more on the consumer space—in the corporate space real-time isn’t so important,” said McNulty, adding that for corporate clients it is more an issue to keep those payments secure all the way through: “It’s more like, ‘I need to make a payment today, I need to know that payment will be delivered [safely].”
Choosing this type of service means keeping with payments rails that have been comfortably established, according to McNulty, rather than switching over to a completely new system.
This familiarity and the lack of interest in real-time, could be why SWIFT gpi was (considered to initially, but) not built on distributed ledger technology.
However, DLT is still in the minds of many in banking—including SWIFT, which is currently exploring its use for real-time reconciliation for Nostro accounts, with a proof-of-concept already in the works.
To learn more about cross-border payments, join us in San Jose on March 6-7 for Bank Innovation 2017, where the best conversations in fintech take place. Request your invitation here.4 - Readers Like This Post