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Recently, the Society for Worldwide Interbank Financial Telecommunication (SWIFT) has made an announcement about the initiation of its Global Payment Initiative (GPI) service. The main aim of the latter is to facilitate competition with the rapidly expanding blockchain and FinTech solutions that such entities as Ripple,JP Morgan and Transferwise provide. Although, the project is still at its early stages, it has a very promising goal – to improve the efficiency of payments through setting a foundation of a new interactive service with high integration. The feature will be available to banks in the SWIFT network.
The GPI has been successfully tested in October, and involved cross-border transactions through banks in China, Singapore, Thailand and Australia. The system was created to maximize the speed of identification and get rid of errors and potential omissions in payment details. It is often the case that the beneficiary information is wrong or incomplete and not all of the regulatory documents were provided. Human error is the factor that is at times highly unreliable, so GPI payments service is supposed to enable fast and convenient transactions, with lower costs, delays and an improved customer experience.
SWIFT has also been quite defensive in relation to blockchain-based FinTech startups. Its main counter strategy involved a same-for-less product positioning – same services at a lower price. A classical example would be J.P.Morgan’s Interbank Information Network (IIN). It was presented to the world in fall and already has such loud names as Santander and Societe Generale among its members. INN was developed to minimize friction in the global payment process, and deliver funds to the beneficiaries faster and is a much simpler and convenient way. It is a tool created to upgrade banks with a new way for error resolution and improved compliance. This is achieved through a mutual distributed ledger, which allows banks to share information through a much faster and safe means.
For the purpose of comparison, SWIFT’s GPI utilizes an API that gives banks an ability to access each other’s data and confirm the information of the recipient account prior to processing the payment. This way, errors and potential delays are minimized.
Recently, SWIFT has issued a statement, communicating that for future successful operation there must be real-time dynamic interaction between banks. Customers around the world are looking for convenient and efficient international payments, which suggests that the informational vacuum must be disrupted. Subsequent post-payment investigations and reconciliation services will then allow to settle all compliance and regulatory requirements, making sure that there are no obstacles to fast payment processing.
The launch of the pilot GPI pre-validation service is scheduled for the beginning of 2019 and will cover fifteen large international banking institutions, such as J.P. Morgan and Citigroup. The global financial community is expecting top-level transparency from SWIFT, in order to be able to track payment beneficiaries and originators, along with all the costs and other nuances related to the transactions.