Creating a brighter future for payments

Cross-border payment transactions have evolved greatly. Recent improvements mean they are now faster, more transparent and more frictionless than ever. However, there is still room for change. Looking forward into the future, there is a world in which instant payments flow seamlessly through interconnected systems, and where they are embedded almost invisibly into the customer experience. 

From instant transactions to central bank digital currencies (CBDCs), there is a range of new and emerging digital developments that have the potential to reshape the cross-border landscape. Change however cannot occur on its own, and at Swift, we are working closely with the financial community to build a better future for payments.  

Developments driving change

The G20 has developed a roadmap that looks to improve the speed, cost, transparency, choice and accessibility of cross-border payments with new developments occurring rapidly to help realise these goals. So, what’s driving these changes? 

• Heightened competition: The core payments space is seeing greater competition at all levels, from alternative providers and fintechs to large, established players. 
• Building connections: Domestic market infrastructures are increasingly looking to connect and interoperate with each other. This is leading to explorations of new ways to settle payments, from CBDCs to instant payments. 
• Front-end innovation: Significant development is also taking place on the front-end, including the rise of new apps and ecommerce platforms.

In response to these drivers, banks are now evolving their offerings together with Swift. 

Firstly, Swift is helping financial institutions enhance their efficiency by moving towards a goal that sees every payment pre-validated, frictionless and instant. A Payment Pre-validation service minimises the chance transactions will be returned, halted or repaired by allowing banks to review key information, such as whether an account exists, or whether a purpose code is needed in a particular country, all before the payment is sent. 

Swift Go is improving the cross-border payment experience for consumers and small and medium-sized enterprises (SMEs), by facilitating quick, easy and predictable transfers that can be sent directly from an end customer’s bank account. 

Swift is also working to help banks provide innovative services in the front-end and embed their services into the e-commerce transaction experience. This can be seen through Swift gpi, where we have designed ways to embed data from gpi into banks’ front-end systems, allowing end users to get their data and pass information directly into their ERP systems enabling auto-reconciliation.  

Bring benefits throughout the community

Once payments have become seamless, transparent, and completely embedded into the customer journey, they will essentially be invisible, leading to a better future for the financial industry. Diverse providers, competitive services and a high degree of interoperability will also exist in this landscape, leading to a wide range of benefits for consumers, corporates, and banks. 

Consumers and SMEs will see their most significant improvements in achieving greater transparency, cost-efficiency, and ease of use. For SMEs, better-structured information will lead to incoming payments being able to be reconciled easier. Businesses will then be able to utilise funds received to pay suppliers quicker, without having to wait for payments to clear before moving to the next project. 

For larger corporates and enterprise treasury teams, the overriding consideration continues to be cash and liquidity. Wholesale payments have already accelerated, with more transparency over their status and progress through the transaction lifecycle. This means the next opportunity for change lies in transforming liquidity management. 

External challenges like rising interest rates and unstable economic conditions are presenting a large challenge, so companies are needing to pinpoint how much budget is available for investments. Swift is working to bring corporate customers more visibility over their account balances and statements in real-time using APIs. Other priorities for large corporates include digitisation and automation, fraud and compliance, and ESG.

For banks, Swift’s roadmap presents a way to meet the evolving expectations of end customers, both today and new expectations in the future. Collaboration and interoperability will be essential and there is a huge opportunity for banks to work together to reinvent the way that payments operate across the financial infrastructure.