Categories: FinTech NewsNews

SWIFT Is Trialing a New Payment System to Take on Fintechs and Blockchain Tech

The Society for Worldwide Interbank Financial Telecommunication (SWIFT) has announced its decision to launch a pilot Global Payment Initiative (GPI) service which aims to compete with the growing threat of competing blockchain and fintech solutions provided by institutions like Ripple, JP Morgan and Transferwise.

Still in its initial stages, the ambitious pilot aims to “build the foundation of a new integrated and interactive service that will significantly improve efficiencies in the payments process and which will ultimately be made available to all 10,000 banks across the SWIFT network.”

A recent GPI test, was successfully conducted  in October, carrying out instant cross-border payments with banks in China, Singapore, Thailand and Australia. Equipped to enable speedy identification and elimination of errors and omissions in payment data such as missing or incorrect beneficiary information or incomplete regulatory information, SWIFT hopes the GPI payments service will enable speedy and seamless transactions, thereby reducing delays and costs, as well as improving customer experience.

Taking on Blockchain's Threat

With the move, SWIFT has turned its attention to containing the threat of blockchain-based fintech startups offering the same services at a cheaper price. One such blockchain project is J.P.Morgan’s Interbank Information Network (IIN). Launched in September, it now boasts a membership count of more than 130 banks, including Satander and Societe Generale.

IIN, claims to minimizes friction in the global payments process, enabling payments to reach beneficiaries faster and with fewer steps. With its membership still growing, IIN promises banks the ability to resolve errors and compliance issues speedily by sharing information on a mutual distributed ledger.

SWIFT's GPI, on the other hand, uses an Application Programming Interface (API) which enables banks to access each other’s data to validate recipient account information before payment is processed, thereby avoiding errors and delays.

An excerpt from the statement released by SWIFT reads:

“Fully integrated with GPI payments, the service will facilitate real time dynamic bank-to-bank interaction using APIs to improve the predictability and efficiency of international payments, and look at using predictive analytics. It will later be complemented with a post-payment investigation and reconciliation service that will allow for fast resolution of the remaining factors, typically arising from compliance or regulatory requirements, which can slow down the payments process.”

The pilot GPI pre-validation service is set to kick off at the beginning of 2019 with 15 selected banks including J.P. Morgan, Barclays, Bank of China and CitiGroup, among others. According to SWIFT, the service is expected to provide total transparency to payment beneficiaries and originators, making the cost, routes and delivery of their funds highly predictable.

Featured image from Shutterstock.

Last modified (UTC): December 9, 2018 12:24 AM

Share
Tags: SWIFT
David Hundeyin @DavidHundeyin

I am a busy Nigerian writer, journalist and writer with an interest in tech and finance. When I'm not contributing to CCN and traveling around Africa, you can catch me contributing to CNN Africa, or in the writers room at 'The Other News', Nigeria's weekly answer to 'The Daily Show' with nearly 2 million viewers. My work on 'The Other News' was featured in the New Yorker Magazine, and that was then cited in the Washington Post so I'm not sure that counts as a feature but I'll definitely mention it too! I have been nominated by the US State Department to take part in the 2019 Edward R. Murrow Program for journalists under the International Visitors Leadership Program. I also like hamsters. You can reach me on Twitter at _David_Hundeyin

News Tip?

tips (at) ccn.com