Corporates and banks will soon be able to track the status of inbound payments in real time, in the latest innovation to come out of Swift’s global payments innovation (gpi) system.

The inbound payments tracker is currently in pilot with a group of global banks including BNP Paribas, Citi, Deutsche, HSBC, Intesa Sanpaolo, National Australia Bank, Société Générale, Standard Chartered, and UniCredit. On the corporate side are Alibaba and General Electric.

Speaking to GTR, Marc Delbaere, Swift’s global head of corporates, explains the rationale behind the new service. “This is all about being able to short-circuit the chain of correspondent banking through direct information,” he says. “As soon as a payment is available anywhere within the Swift network, you can get visibility on its status without needing to have received it properly. Sending information about the payment is much easier than actually processing the payment, because you don’t need to go through all of the processing chains, the filters, and the liquidity checks; you just need to know if someone has issued the payment. With the inbound payment tracker, you can start bringing payments into your overall cash forecast or your processes in general.”

Swift originally rolled out the outbound payment tracking system in May 2017 in response to a common complaint from its users about the lack of visibility on the status of payments. Initially, the tracker was only available to banks, meaning that their clients had to rely on them to monitor the status of their payments. July this year saw the launch of Swift gpi for corporates, which gave multi-banked companies a single centralised view across all their banking partners.

However, for corporates receiving payments, getting visibility on incoming transactions for reconciliation and forecasting purposes has remained a burden. With this new service, corporates can gain visibility over incoming payments, helping with working capital management by improving receivables forecasting, improving accuracy for intraday credit line needs, and providing further benefits in supporting credit control with reconciliation operations. The new service would also benefit banks more directly by enabling their treasuries to better forecast daily FX needs and, therefore, reduce the need to ask corporates for this information, says Swift.

Creating value

For Swift, this latest innovation is part of a longer-term plan to create value in the payments space, and it is now working to ensure that all stakeholders are taken into account when designing new products. “What has been even better this time, compared to the initial launch of gpi, is that we have involved the corporate vendors in the mix from day one, including them in the initial kick-off and working groups so that they don’t come late to the party,” says Delbaere. “We have realised how important they are for a successful roll-out of anything in this space, since it is all about integrating information in the corporate dashboard.”

Given the current push by Swift – and several others including rival Ripple – towards fully real-time payments, putting resources into tracking a process that may only take minutes seems somewhat illogical. However, Delbaere is clear on the rationale. “The question that many people have is, what value does this have in a world where things are going faster and faster and turning to real-time? But there are still a lot of use cases even in the case where the payments take five minutes,” he says. “The first one is anything that has to do with exceptions. Since it is about providing a payment status, it means that if something goes wrong down the chain, you will know that immediately, because usually you would never know if the payment has been really initiated or has been blocked. With this system, you would be able to see that indeed the payment has been done and you would be able to see whether there is any issue, and you would start being able to initiate any actions to resolve it earlier.”

He adds that another big area of value is around payments with a forward value date: “If someone is paying you with a future date then the moment that this payment gets sent to the banking world, you would know exactly that this payment has been done, otherwise it would sit in the ether for two days before you would be told about it.”

Innovator or dinosaur?

While Swift has been diligently working away at various iterations of its real-time payments service around the world, and coming up with solutions such as an investigation and resolution service to speed up the handling of operational, compliance and regulatory issues that can arise along the payments chain, it continues to meet with fierce criticism from some corners around its capacity and ability to innovate.

At the recent Sibos event held in London, several players from the banking and fintech industry expressed privately to GTR that they felt the payments network is failing to keep up with new entrants. Meanwhile, blockchain rival Ripple continues to point out that Swift’s improvements in speed don’t change the fundamentals of the correspondent banking system, and remain “just a marginal improvement” on “very old architecture”.

However, Swift has long pointed out that, although its technology may not be bleeding-edge, its strength is in its network. “Everything that we do in any domain, be it payments or trade, has to be done at scale. What we want is that our initiatives can tap into a whole industry effort to be able to realise value,” says Delbaere. “With gpi, banks want to raise the bar collectively, and our role is to solve problems in their entirety. We are not interested in solving marginal problems. If you are looking at the key differentiator of Swift, it is our ability to engage large communities to do things in a standard fashion.”

Thus far, the pilot of the new inbound payment tracker is going well, says Delbaere. “We have an engaged group, with a lot of trust and a good understanding of what they are trying to set up, clarity and intent and the clear technical path forward to achieve it.” The plan now is for a “controlled live” launch early next year, with the objective of full general availability for the middle of 2020.