Transforming Corporate Treasury - what lies ahead, and what is the impact of SWIFT gpi?
The future of corporate treasury today is umbilically linked to the future of cash management: SWIFT gpi proves it. The global payment visibility the standard brings, in addition to its speed and high data quality, is completely transformative for international cross-border settlements.
Gpi accomplishes this by resolving many of the frustrations that have existed for decades in the global payments space. No more wondering where the payment has got to, no more going from pillar to post with numerous phone calls to multiple correspondent banks in the transaction chain, no more delays waiting for responses, no more embarrassed apologies to clients.
What will happen instead:
• Pre-validation of payments
• Real-time tracking of payments
• Real-time data
• Transparent data
...all adding up to beneficiaries receiving punctual payments together with the necessary to support automated reconciliation.
For many years multinationals and others have struggled with cross-border payments. Convoluted routing via (often multiple) correspondent banks with opaque ‘lifting fees’ deducted en route from the original payment amount. All guaranteed to make the process both costly and administratively burdensome. Many corporates opened in-country accounts with network banks to try to solve some of these problems. However, in certain jurisdictions they then often faced issues around the resident and non-resident status of these accounts, as they made great efforts to look and feel local to their trading counterparts.
SWIFT gpi promises to “make everything as simple as local payments”, with simple tracking of both payments and receipts. For me, the tracking of inbound receipts is the more pertinent, as it provides certainty of information as much as two days prior to the settlement date. This provides corporate treasurers with the necessary data to reconcile in real-time and to have certainty of their cash position even before the value date. That in turn enables more informed investment and funding decisions based on enhanced cash flow analysis.
The further benefits of these real-time cash flows permeate right through the corporate supply chain. Timely settlement and comprehensive data flow lead to timely reconciliation which in turn leads to:
• Faster release of customer credit limits
• Reduced day sales outstanding
• Manufacture for point-of-sale
• Lower warehousing and inventory costs
• Faster recirculation of working capital
• Potentially higher sales volumes
A new type of collaborative partnership is the way forward
Key to the success of gpi, SWIFT worked with vendors from inception. This form of collaborative partnership with the right fintechs is fundamental to the future success of the project and is also a key development priority for both banks and corporates as they strive to take advantage of new and emerging technologies. There is increasing acceptance that ‘going it alone’ is not a viable strategy and that collaborative partnerships are the pathway to future success.
A truly real-time payments landscape with certainty of settlement and transparency of information is the overarching objective of gpi. Pivotal to this is connectivity and data retrieval. Corporate treasurers have struggled over many years to connect their treasury ecosystems fully and seamlessly. Moving to a real time treasury exacerbates this challenge, so having the right data in the right place at the right time is integral to resolving it.
SWIFT gpi will ultimately transform the cross-border payments landscape and in turn will lead many corporates into a brave new real-time decision-making environment. Furthermore, when coupled with other disciplines that are data-hungry - such as artificial intelligence or machine learning - it can radically reduce treasury’s manual process workload.
This can be invaluable in freeing up treasury capacity that can be diverted to value-added and strategic activities, such as business advisory. SWIFT’s stated aim is to “make cross-border payments as simple as domestic ones” and that brings with it a myriad of opportunities - provided the corporate treasury is completely connected to its banks and peripheral systems. Ultimately, data becomes more transparent, available and valuable through better API driven connectivity.
It’s all about the data and connectivity
At Gresham we have a long and established track-record of providing multibank connectivity and payments delivery through file agnostic channels. We strongly believe connectivity to banks, ERP systems, Treasury systems and the whole treasury ecosystem is vital to be able to take advantage of the emergence of real-time technology.
About the author— Bill Wrest
Bill was Head of Innovation for Non-Bank Financial Institutions at Barclays Corporate. Prior to Barclays, he was with Bank of America Global Payments Solutions in London. As a Senior Vice President and Relationship Manager. He also has extensive experience working with multinational corporations and managing treasury system sales. Bill joined Gresham in 2016 where as Director of Sales and Strategy he works to create innovative cash and treasury solutions.
Gresham Tech’s Clareti Multi-Bank platform handles automated channel banking integration for corporate and wealth management clients and supports various payments-related business processes such as cash and treasury and trade finance.