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Tracking Money Globally is Critical for Banks and Customers

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Tracking Money Globally is Critical for Banks and Customers
Suyash Desai, M Rajendran - 24 May 2019

Kiran ShettyCEO SWIFT India

What does SWIFT mean for Indian customers?

International transfers are critical for India as we work towards improving the ease of doing business as a trading partner. SWIFT has already been supporting the India community with its cross-border payments for decades, but with SWIFT gpi, a new paradigm is in place that will facilitate international transactions by making them faster, more transparent and fully traceable.

 How will things be different?

SWIFT gpi is the biggest change to have happened to correspondent banking in the last three decades. The new service that was initiated by the banking industry  has been live since February 2017 drastically improves customer experience for corporate treasurers.

Money is now credited to the end beneficiary in less than 30 minutes and many in seconds. With end-to-end traceability banks can now track where their payment is in the chain in real-time. This not only improves customer experience, but also already reduced enquiry-related costs by 50 per cent.

Is the technology  different to reduce the time taken for such transfers?

 

The technology itself was never an issue, and it takes only two seconds to send a SWIFT message from one bank to another. It is the business processes at the banks’ side that were creating friction, and this is what SWIFT and the banking industry have been tackling with SWIFT gpi. The initiative has been built to resolve these frictions by implementing a set of Service Level Agreements that ensure same-day settlement of funds.

The gpi tracker now allow for real-time tracking of a payment via API, and we are looking closely at how emerging technologies such as distributed ledger technology (DLT) could be useful going forward.

Estimated costs when the service is in place

Transaction fees are, and always have been, decided by the banks themselves. SWIFT charges an average of five euro cents per message when transacting over our messaging network.

What strategy do you have in place for security?

Security has always been one of our main concerns and its core network have never been compromised. The same methodology is used for gpi.

However...incidents happened after a customer suffered security breaches within its locally managed infrastructure.

SWIFT customers are individually responsible for the security of their own environments; however, the security of the industry as a whole is a shared responsibility. We have therefore launched the Customer Security Programme (CSP), which aims to improve information sharing throughout the community, enhance SWIFT-related tools for customers and provide a customer security control framework. Through this programme, we also share best practices for fraud detection and enhance support by third party providers

Currently how many SWIFT partner banks  (public and pribvate) are in India?

SWIFT India is a joint venture of SWIFT SCRL and 11 banks in India. Among these are six public-sector banks, three private-sector banks and two global banks.

Globally, SWIFT is a cooperative that belongs to its 11,000 members.

 

How safe  is cross border payments?

Payment controls are a new tool to guard against payment fraud. As part of the Customer Security Programme, we developed this service to help prevent fraudulent transactions. With payment controls, you are immediately alerted to suspicious, high-risk or out-of-policy activity. The service has been specifically designed to initially meet the control needs of lower volume SWIFT institutions, providing real-time in-flight transaction screening with easily pre-configured rules.

In essence, Payment Controls screens a bank’s sent payments in-flight before they are sent, offering a highly effective primary risk management option.

The hosted service is also completely independent of the bank’s in-house systems, making it a strong secondary defence against potential compromise of back-office systems by cyber-criminals, who may destroy or corrupt records to hide evidence of fraudulent payments.

 

Has PNB fraud or Bangladesh Bank heist incidences impacted SWIFT’s brand and the faith of customers?

While we do not comment on individual cases, we want to reiterate that SWIFT was never compromised. However in some instances, customers suffered breaches in their locally managed infrastructure and SWIFT remains vigilant in providing assistance to  the affected member to safeguard community  security standards.

 

Challenges of new technology?

As new technologies such as blockchain are  gathering more and more interest, we are also  looking into them.

It is a strategic priority for SWIFT to work with new technologies like DLT and incorporate them into key solutions like gpi. We are already working on new  proof of concepts (PoCs) and will continue our R&D efforts to ensure that SWIFT customers will be able to leverage their existing SWIFT infrastructure and connectivity to benefit from blockchain services, whether offered by SWIFT or by third parties, on a secure and trusted platform.

 

How much India does contribute to SWIFT gpi traffic and what was its average contribution?

As of today, ICICI Bank is live on SWIFT gpi in India and four other banks are implementing and will be live later in the year. When that materialises, we will share more data insights on India’s gpi traffic evolution.

 

How soon can we expect the SWIFT gpi service that is to have 10,000 banks on board to be functional?

SWIFT gpi is already live and seeing hundreds of thousands of transactions performed on a daily basis by the over 60 banks that are already live. Today SWIFT gpi accounts for more than 35 per cent of SWIFT payment traffic in major country corridors such as USA-Chin. By the end of 2020, we expect universal adoption of SWIFT gpi by our 10,000 member banks.

 

Are there any plans to enter  retail market?

With SWIFT gpi, we are making cross-border payments faster, transparent and fully traceable. In parallel, domestic markets are increasingly moving to real-time payments, as was recently the case of Australia that just launched the New Payments Platform, of which SWIFT built, designed and operates the basic infrastructure. With these in mind, we are now looking at how to connect these real-time domestic payment platforms to SWIFT gpi to also allow for tracking on the local leg of a payment, and to ensure near real-time cross-border payments, going from one domestic market to another. This would have applications for wholesale as well as retail. In India, we are working with NPCI on the payment mechanisms to make it possible.

 

stopping payment on click of button, what is the back up in case of system failure?For

The stop and recall function on SWIFT gpi will allow payment messages to be immediately stopped in case of fraud or error, no matter where they are in the gpi transaction chain. It will be made available to all SWIFT gpi users by end of 2018.

rajendran@outlookindia.com, suyash@outlookindia.com                                                   

New challenges in financial transaction is an opportunity to serve customers better states Kiran Shetty,SWIFT India CEO in an email interview to M.Rajendran and Suyash Desai

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