SWIFT gpi fully meets goals of speed, low cost and transparency


Societe Generale processes international payments via SWIFT gpi, which is becoming the new standard in this area. The Head of Cash Clearing Services explains the major strides allowed by gpi, which meets the banks' expectations for these payments. Societe Generale is one of the leading banks on this standard and participates in the improvement works.

What does the Cash Clearing Services business entail?

We make sure that the cross-border payments our clients entrust us with get where they need to go. A currency doesn’t leave its home country. So, when a client makes a cross-border payment, their bank uses the services of a correspondent bank. We play this role of correspondent bank for banks outside the eurozone from across the world. In more concrete terms, we provide them with indirect access to European exchange systems through an account holding service – Loro for us and Nostro for them – in order to make all cross-border payments possible.


Why did Societe Generale so quickly become interested in SWIFT gpi to improve its cross-border payments?

Thanks to its secure network and high standards, SWIFT has been driving interbank exchanges for cross-border payments since it was created in the 1970s. However, the world has changed a lot since then. It has become a village. Our end clients, which are mostly individuals, expect to be able to send a payment to the other side of the world quickly, easily and relatively inexpensively. Several players such as Transferwise and Moneygram have entered this high-growth, cross-border BtoC and CtoC payment segment –successfully in some cases – using operating models that banks are hesitant to reproduce for reasons of compliance risk tolerance. France has held up relatively well against this wave thanks to its bank cards. However, banks have suffered a lot elsewhere, in Australia for example, or, as is the case in China, they are preparing for the next assault from online players, which in a short period of time have become indispensable for domestic payments.

SWIFT gpi, which was launched in 2016, is the perfect answer to the desired speed, low costs and transparency. This is why we got on board quickly at the very beginning of the project.

Today, there are hundreds of banks that have joined SWIFT gpi. Societe Generale is one of the less than twenty large banks that are leaders on this standard and all of its functionalities. For the last 18 months, Societe Generale has been live for all currencies, regardless of its position in the payment chain. Societe Generale is also taking part in workshops organised by SWIFT in order to constantly improve the service, which is covered by a multi-year programme. This subject is stirring a great deal of interest among corporate cash management departments, with the development of solutions with new functionalities specifically tailored to corporates.

At the end of December 2018, there were 116 banks live on gpi and 400 other banks that had subscribed to the service and planned to implement it. 55% of cross-border payments are already done via gpi, simply because the 116 banks that use it are the largest on the planet and handle the majority of cross-border payments.


What actually changes for the end user with SWIFT gpi?

Banks like Societe Generale make four commitments when they become a gpi bank.

The first is to process at least 90% of payment transactions within one day. At Societe Generale, 62% of cross-border payments are processed in less than five minutes. This performance puts us well above the gpi bank market, which processes 53% of payments in less than 30 minutes!

The second commitment involves transparency. The banks involved in the payment chain will disclose to each other the fees charged at the different steps in the payment chain, FX commissions and margins. It is then the banks’ responsibility to detail these changes to end users in their sales policies. So, this puts pressure on prices and I am convinced that the cost of cross-border payments will continue to fall over the next five to 10 years.

The third commitment involves payment traceability. Gpi banks commit to sending a status for each payment they handle to the SWIFT tracker. As such, parties involved in the payment can track every one of their transactions at any time and will know when the recipient receives their funds. 

Finally, gpi banks commit to providing all of the information sent by the issuing bank, specifically to facilitate account reconciliation. 

SWIFT provides gpi banks with a tool that enables each bank to assess their operational performance against the gpi expectations, expressed in the form of KPIs. Societe Generale has fully met these quality requirements since last summer and, as such, is among the global “best in class”.


"Hanging onto what we have now without preparing for the future would be a fatal mistake. At Societe Generale, our drive is to continue serving our clients by drawing on correspondent banking's proven technology, while also looking into innovative solutions that may be partial or complete solutions of tomorrow." says Jean-François Mazure, Head of Cash Clearing Services


Are gpi payments real-time payments, or will they be in the future?

They are not real-time payments. Real-time systems are currently only domestic. The increasing number of real-time systems is a major market trend. There were 40 worldwide in 2018 compared to 25 in 2017, and five new systems are being developed. Connecting these real-time systems together, possibly under the aegis of SWIFT, is surely the next step. SWIFT has been working on this recently through a PoC (Proof of Concept) with Australian, Singaporean and Thai banks, apparently with positive results.


SWIFT gpi means lower costs for end clients. What are the benefits of offering this service for banks?

Virtually no business sector can escape the fourth industrial revolution that we are experiencing right now – the digital revolution. Everyone has to adapt or risk becoming irrelevant. Hanging onto what we have now without preparing for the future would be a fatal mistake. At Societe Generale, our drive is to continue serving our clients by drawing on correspondent banking’s proven technology, while also looking into innovative solutions that may be partial or complete solutions of tomorrow.

People have been predicting the death of correspondent banking for years. However, what we are doing with the SWIFT network remains highly efficient. Some people believe that everything will converge towards real time transactions at any cost, but I’m not so sure. It is up to banks to maintain their key role, by providing increased value, a better user experience and, above all, remaining the trusted third parties that they are today.

SWIFT gpi is cementing its place as the new cross-border payment standard. This is a core trend which is fully in line with our search for innovation and increased value for our clients. This is in addition to the improved experience for all parties thanks to transaction traceability, which provides real-time information to the entire payment chain and avoids unnecessary investigation costs.


Are there blockchain-based gpi improvement projects?

Blockchain applied to payments is a frequently discussed topic. We have not yet come across a blockchain-based solution that is truly capable of replacing the SWIFT network. However, it can be useful for certain blocks or components of our processing chains.

For example, one of the pain points that we all suffer from – banks and clients alike – is compliance alerts. Banks are invested in monitoring and pinpointing suspicious payments, complying with sanctions regulations and embargoes issued by governments or other organisations, and anti-money laundering and counter-terrorist financing.

Each incoming and outgoing payment is filtered through sanctions and embargo lists before processing. Whenever a doubt over a payment arises, it is blocked and we launch an investigation with our colleagues. This leads to back and forth with questions and answers moving between banks, which takes time and causes the client experience to deteriorate. The market standard is to handle these issues in less than five days, but we don’t always manage it. The issuer and the end client don’t always understand these delays.

Initiatives to speed up processing are starting to come to light, such as SWIFT’s Case initiative and the IIN (Interbank Information Network) consortium. This is a blockchain network that enables banks to speed up alert handling by guiding the investigations directly to the issuing bank. Over 100 banks, including Societe Generale and Santander in Europe, have already demonstrated an interest in this solution to JP Morgan, which is driving the initiative alongside Australian bank ANZ and Canadian Bank RBC. At Societe Generale, we are looking at all possibilities, and are participating in the IIN initiative.


Interview by L. B.

Source: Banking & Strategy no. 377, Universwiftnet, Banks-Corporates Relations, 19 February 2019 (in French only)