BOTTOMLINE & SOCIÉTÉ GÉNÉRALE: CROSSBORDER PAYMENTS
A question of standards Eric Bayle, Head of UK-based global transaction banking team for Société Générale, and Edward Ireland, Global Solution Lead for Bottomline Technologies, believe ISO 20022 and SWIFT gpi show interoperability between crossborder payment schemes is not just desirable, but possible Legacy banks across the world, which have long enjoyed a highly lucrative near-monopoly on providing complex monetary transactions, such as crossborder payments, now face a tidal wave of competition. Blockchain-based newcomers, notably Ripple, as well as financial giants Visa and Mastercard, have been extending their reach as the ever-increasing digitisation of the financial world offers up new opportunities. Against that background, SWIFT (Society for Worldwide Interbank Financial Telecommunication) network, a global messaging system for bank-to-bank payments, developed in the 1970s, remains the de facto standard for high-value international transactions, used by more than 11,000 institutions
26 FintechFinancePresents
across 200 countries, including some of the newest fintech arrivals. Founded by banks for banks and headquartered in Europe, SWIFT began to feel the hot breath of competition some years ago and responded with an enhanced messaging system, SWIFT gpi (global payments initiative), in 2017. A step-change in how the correspondent banking network operates, it vastly improved the speed of those transactions, from days to minutes, with full transparency of the payment journey between the counterparties. Since 2018, all transactions have carried a UETR (unique end-to-end transaction reference), which offers full tracking of payments on the SWIFT network. And, from November 2020, it will be mandatory for all financial institutions to send confirmation of incoming payments, too. However, perhaps the single most
2020 Special
important change to the payments landscape that affects SWIFT (and everyone else in payments for that matter), is the introduction of a new, open and universal messaging standard, ISO 20022. The standard for a modern, data-driven payments world, and one in which application programming interfaces (APIs) are increasingly becoming the accepted way of improving client experience. Already used by payment systems in more than 70 countries, ISO 20022 will run alongside SWIFT’s legacy MT messaging from 2021, with the latter phased out by 2025. The migration of high-value payment systems in multiple jurisdictions to ISO 20022 at pretty much the same time has been described by Deutsche Bank as ‘probably the most impactful payments industry undertaking since the introduction of the Single Euro Payments Area’. www.fintech.finance
