United Kingdom
30 May 2018
Harry Newman of SWIFT explains why the UK is currently at the forefront of change and innovation in the payments industry
Image: Shutterstock
Do you think the last 12 months have been positive for the payments industry? What progression have you seen?
The last 12 months have been an exciting and transformational period for the payments industry, following the rollout of SWIFT global payments innovation (gpi) in January 2017, the largest transformation in cross-border payments over the last 30 years.
SWIFT gpi dramatically improves the customer experience in cross-border payments by increasing speed and transparency, and by introducing end-to-end tracking.
Hundreds of thousands of cross-border payments are today being sent using the new gpi standard, and payments are typically made within minutes, even seconds. It is set to be the standard for all cross-border payments made on the SWIFT network by the end of 2020.
A panellist at the SWIFT Business Forum in London said that SWIFT should look to do more within the financial technology (fintech) space. How do you react to this comment?
SWIFT is very active in the fintech space through Innotribe, our unique incubator that brings together innovators and investors from leading financial institutions worldwide to identify, develop, and implement transformational innovations. Since 2011, the Innotribe Startup Challenge has connected the financial services industry with more than 650 fintech startups. While supporting community engagement, it has also enabled us to stay abreast of the latest innovation activity. Through the year, there are showcases across the globe featuring fast-paced company pitches and social networking events.
Do you think collaboration with smaller financial technology firms is the answer to innovation around technology in the industry?
Fintechs of all shapes and sizes have a role to play in innovation and disruption in the payments industry; we encourage and support the way they develop and progress ideas. In a sense, SWIFT was the original fintech startup 30 years ago and, as a leader in supplying innovative solutions to the financial services industry, is always looking at how new technologies can improve the payments experience. Fintechs have a big part to play in that.
SWIFT recently extended its instant payment tracker, what does the extension provide clients? And have you had any feedback from clients on the extension?
In March, we announced that from November this year we will extend our gpi Tracker to cover all payment instructions sent across the SWIFT network, enabling gpi banks to track all their SWIFT payment instructions at all times. Feedback from gpi banks has been extremely positive, with many reporting that, as a direct result of the speed and transparency afforded by gpi, they have seen a significant reduction in frictions and as much as a 50 percent fall in their enquiry costs.
Are you planning to release any further updates throughout the rest of this year? If so how will these improve clients cross-border payments experience?
The gpi is rapidly gaining customers, as they see the benefits of improved speed, transparency and traceability. But this is a journey to a new industry standard, during which we expect to be rolling out additional features in the coming months.
There have been concerns in the industry that innovation and change within payments sector in the UK is moving too slow. Do you agree with this? If so, why do you think this is and what can the UK do to improve?
The UK has for a long time been at the forefront of change and innovation in the payments industry, leading the way with instant payments and open banking. Instant payments are now being adopted in many other countries, such as Australia where SWIFT helped design and construct the infrastructure for the new payments platform. Equally we will soon supply connectivity to the European instant payments system Target Instant Payments Settlement (TIPS) and the EBA’s pan-European RT1 platform. With Open Banking, the UK started well ahead of the rest of Europe, and efforts led by HM Treasury go back as far as 2015. Improving access to open data, and making account switching seamless and straightforward, are all initiatives where the UK has led the way.
What challenges are you experiencing around preparations for the implementation Second Payment Services Directive (PSD2)?
The Second Payment Services Directive (PSD2) is bringing strong security requirements with mandatory two-factor authentication. This will improve safety in retail banking, which is crucial when new third-party payment providers begin entering the market. The impact will be lesser in the corporate to banking space, where secure and automated communication with strong customer authentication has been the norm for many years. SWIFT has always been at the forefront of efforts to improve security so we strongly support these developments.
What opportunities will the directive bring?
Inherently PSD2 will increase competition in the banking space, not only with new fintechs but also between the banks themselves. We will likely see new products and services—ultimately, this will benefit the end customer, and spur further growth in our industry.
What are your predictions for the next 18 months in the payments sector? What developments do you think the industry will see?
As customer requirements and expectations increase, I expect the sector will continue rising to the challenges presented to them.
At SWIFT, we are constantly evolving, innovating and expanding our services. I expect to see further gpi services rolled out in the coming months, further enhancing our customers’ payments experience as gpi quickly becomes the new industry norm. For example, using gpi we are exploring how we can link real-time payments systems together in regions such as Asia Pacific, building upon our successful design and construction of the infrastructure behind the new payments platform in Australia.
The last 12 months have been an exciting and transformational period for the payments industry, following the rollout of SWIFT global payments innovation (gpi) in January 2017, the largest transformation in cross-border payments over the last 30 years.
SWIFT gpi dramatically improves the customer experience in cross-border payments by increasing speed and transparency, and by introducing end-to-end tracking.
Hundreds of thousands of cross-border payments are today being sent using the new gpi standard, and payments are typically made within minutes, even seconds. It is set to be the standard for all cross-border payments made on the SWIFT network by the end of 2020.
A panellist at the SWIFT Business Forum in London said that SWIFT should look to do more within the financial technology (fintech) space. How do you react to this comment?
SWIFT is very active in the fintech space through Innotribe, our unique incubator that brings together innovators and investors from leading financial institutions worldwide to identify, develop, and implement transformational innovations. Since 2011, the Innotribe Startup Challenge has connected the financial services industry with more than 650 fintech startups. While supporting community engagement, it has also enabled us to stay abreast of the latest innovation activity. Through the year, there are showcases across the globe featuring fast-paced company pitches and social networking events.
Do you think collaboration with smaller financial technology firms is the answer to innovation around technology in the industry?
Fintechs of all shapes and sizes have a role to play in innovation and disruption in the payments industry; we encourage and support the way they develop and progress ideas. In a sense, SWIFT was the original fintech startup 30 years ago and, as a leader in supplying innovative solutions to the financial services industry, is always looking at how new technologies can improve the payments experience. Fintechs have a big part to play in that.
SWIFT recently extended its instant payment tracker, what does the extension provide clients? And have you had any feedback from clients on the extension?
In March, we announced that from November this year we will extend our gpi Tracker to cover all payment instructions sent across the SWIFT network, enabling gpi banks to track all their SWIFT payment instructions at all times. Feedback from gpi banks has been extremely positive, with many reporting that, as a direct result of the speed and transparency afforded by gpi, they have seen a significant reduction in frictions and as much as a 50 percent fall in their enquiry costs.
Are you planning to release any further updates throughout the rest of this year? If so how will these improve clients cross-border payments experience?
The gpi is rapidly gaining customers, as they see the benefits of improved speed, transparency and traceability. But this is a journey to a new industry standard, during which we expect to be rolling out additional features in the coming months.
There have been concerns in the industry that innovation and change within payments sector in the UK is moving too slow. Do you agree with this? If so, why do you think this is and what can the UK do to improve?
The UK has for a long time been at the forefront of change and innovation in the payments industry, leading the way with instant payments and open banking. Instant payments are now being adopted in many other countries, such as Australia where SWIFT helped design and construct the infrastructure for the new payments platform. Equally we will soon supply connectivity to the European instant payments system Target Instant Payments Settlement (TIPS) and the EBA’s pan-European RT1 platform. With Open Banking, the UK started well ahead of the rest of Europe, and efforts led by HM Treasury go back as far as 2015. Improving access to open data, and making account switching seamless and straightforward, are all initiatives where the UK has led the way.
What challenges are you experiencing around preparations for the implementation Second Payment Services Directive (PSD2)?
The Second Payment Services Directive (PSD2) is bringing strong security requirements with mandatory two-factor authentication. This will improve safety in retail banking, which is crucial when new third-party payment providers begin entering the market. The impact will be lesser in the corporate to banking space, where secure and automated communication with strong customer authentication has been the norm for many years. SWIFT has always been at the forefront of efforts to improve security so we strongly support these developments.
What opportunities will the directive bring?
Inherently PSD2 will increase competition in the banking space, not only with new fintechs but also between the banks themselves. We will likely see new products and services—ultimately, this will benefit the end customer, and spur further growth in our industry.
What are your predictions for the next 18 months in the payments sector? What developments do you think the industry will see?
As customer requirements and expectations increase, I expect the sector will continue rising to the challenges presented to them.
At SWIFT, we are constantly evolving, innovating and expanding our services. I expect to see further gpi services rolled out in the coming months, further enhancing our customers’ payments experience as gpi quickly becomes the new industry norm. For example, using gpi we are exploring how we can link real-time payments systems together in regions such as Asia Pacific, building upon our successful design and construction of the infrastructure behind the new payments platform in Australia.
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