By Mike Faden
Among those options are a pilot initiative by SWIFT, the global financial-messaging network provider, to integrate its speedy gpi international payments service directly with treasury management systems and other corporate applications.1
In a 2018 survey of global treasurers, Euromoney found that more than three quarters of them believed real-time payments would have a significant impact on treasury operations. The combination of faster payments with open banking – which allows integration of payment services with other applications – could deliver a range of business benefits, according to proponents.2 Those benefits may include improved liquidity management and cash-flow forecasting, as well as real-time foreign exchange and currency hedging, according to the Euromoney survey.3
Faster international payment services are rapidly proliferating, with more than 40 schemes operating or in development worldwide.4 Many of these are domestic payment systems that operate 24/7, clearing payments within seconds. However, international payments are getting faster, too. Among the key initiatives are the aforementioned SWIFT gpi, which was designed to deliver same-day international payments and, in reality, often credits beneficiaries within minutes, according to SWIFT. Launched in 2017, SWIFT gpi accounted for nearly 30 percent of SWIFT cross-border payment-message traffic by mid-2018, representing more than $100 billion in daily international payments value.5
The spread of faster domestic and international payment services coincides with the rise of open banking, which allows other applications to directly integrate with banking information and payment services via application programming interfaces (APIs). Treasurers could potentially build banking services into their own applications and embed new capabilities into solutions provided to customers or suppliers. For example, a treasury group could aggregate banking services onto a single dashboard to achieve a clear overview of cash positions across the company.6
In July 2018, SWIFT announced plans to start testing new technology that combines faster international payments with the integration of banking services into corporate applications. The technology lets corporate treasurers initiate and track gpi international payments to and from multiple banks in a single format, while also integrating gpi payment flows into ERP and treasury-management systems. "Corporates want to track payments in real time and get confirmation of credit to the beneficiary's account," according to Marc Delbaere, Global Head of Corporates at SWIFT. "This new multi-bank capability will enable that experience in a consistent fashion, across multiple banks and multiple corporates. Having this information instantly in the corporate treasury space is what corporate customers are asking for."7
Over time, the integration of faster domestic and international payments into corporate financial applications could potentially deliver a broader range of business benefits, proponents say. In the Euromoney survey, 77 percent of treasurers believed real-time payments would have a high or medium impact on operations; only six percent foresaw no impact.
For example, the ability to move cash 24/7 could help treasurers better manage corporate funds. According to Euromoney, 87 percent of treasurers said this ability would help to manage liquidity planning, forecasting, and placement. Armed with a more accurate view of the company’s cash position and the ability to immediately reallocate funds, they could more effectively invest surplus cash balances, for example.
The availability of payments APIs is also opening up opportunities for treasurers to operate more sophisticated cash-management structures with little additional effort, according to Euromoney; 57 percent of treasurers surveyed plan to use APIs to support cash concentration and forecasting across multiple banks.
Integration between faster payments services and corporate applications will pave the way for greater automation of routine processes, increasing efficiency and freeing financial professionals to focus on higher value tasks, according to experts. One financial institution foresees a future where surplus funds are invested automatically according to treasury-determined preferences for risk, return, and diversification, while cash-flow forecasts are generated and updated in real time – pinpointing when and how much borrowing is required.8
Real-time payments could also help companies limit the foreign currency risk associated with international payments, according to observers. FX conversions, for instance, might be carried out automatically and in real time in the future, with hedges generated instantly to address risky exposures.9 Among treasurers surveyed by Euromoney, two-thirds said they would use an FX solution that provided fully automated, 24/7 conversions.
Faster domestic and international payments services are increasingly being integrated into corporate applications, bringing real-time treasury operations closer to reality. The combination of faster payments with open banking can deliver a broad range of business benefits, including better liquidity management and cash-flow forecasting, as well as real-time foreign exchange and currency hedging.
Mike Faden has covered business and technology issues for more than 30 years as a writer, consultant and analyst for media brands, market-research firms, startups and established corporations. Mike also is a principal at Content Marketing Partners.
1. “Corporates pilot to start testing new multi-bank payments tracking on SWIFT gpi,” SWIFT; https://www.swift.com/news-events/press-releases/corporates-pilot-to-start-testing-new-multi-bank-payments-tracking-on-swift-gpi
2. The road to real-time treasury, Deutsche Bank; http://cib.db.com/docs_new/Realtimetreasurywhitepaper.pdf
3. Treasury non-stop: excitement builds for real-time, Euromoney; https://www.euromoney.com/Media/documents/euromoney/pdf/sponsored/Treasury%20non-stop%20excitement%20builds%20for%20real-time.pdf
4. The road to real-time treasury, Deutsche Bank; http://cib.db.com/docs_new/Realtimetreasurywhitepaper.pdf
5. “Corporates pilot to start testing new multi-bank payments tracking on SWIFT gpi,” SWIFT; https://www.swift.com/news-events/press-releases/corporates-pilot-to-start-testing-new-multi-bank-payments-tracking-on-swift-gpi
6. “The road to real-time treasury,” Deutsche Bank; http://cib.db.com/insights-and-initiatives/white-papers/the-road-to-real-time-treasury.htm
7. “Corporates pilot to start testing new multi-bank payments tracking on SWIFT gpi,” SWIFT; https://www.swift.com/news-events/press-releases/corporates-pilot-to-start-testing-new-multi-bank-payments-tracking-on-swift-gpi
8. The road to real-time treasury, Deutsche Bank; http://cib.db.com/docs_new/Realtimetreasurywhitepaper.pdf