Financial network SWIFT has described its vision for cross-border payments that aims to make them as seamless and convenient as domestic ones, with a white paper calling for a future that is instant, accessible, and ubiquitous.
In its white paper Payments: Looking to the Future - Instant, Accessible, Ubiquitous (SWIFT – Engineering a payments revolution), SWIFT said facilitating the exchange of value beyond tightly knit domestic, single-currency communities is inherently more complex for banks, and wants its standard to be adopted globally to help all parties involved.
"Importantly, we don't think that cross-border payments challenges should be solved for with closed loop systems. Doing so would easily solve for a subset -- or multiple subsets -- of participants, but value needs to move everywhere -- from every account, to every account," SWIFT wrote.
"Loops create barriers and friction; they reduce fungibility and portability, they limit competition and they fragment liquidity."
According to SWIFT, the future is within reach, with elements already in place, technology available, and a SWIFT community that is progressing towards it.
"Cooperation by all players in the community is important, because the openness and universality of the envisioned system are unique; the more widely adopted the convention for moving value, the easier the circulation of value -- and the more the convention will be used," the white paper says.
SWIFT said banks are key and that everyone will have to progress in payments.
Highlighted first as a requirement by the messaging service cum payments platform is a new core infrastructure that allows the conversion of one currency to another -- with 180 official currencies in circulation globally, SWIFT said this should occur in a "ubiquitous" manner.
SWIFT said its gpi -- global payments initiative -- should become the new standard.
"Just two years since launch, gpi is widely embraced by the community and fast-proving to be the catalyst for unprecedented change in cross-border payments," its report states.
Within two years, every cross-border payment will be gpi, SWIFT said.
Next is a hyper-connected future, in which gpi-enabled banks are the bridges between real-time domestic payments infrastructures, enabling instant cross border payments to move "seamlessly and safely across borders via SWIFT", 24/7.
According to SWIFT, smarter payments which utilise superior data and the power of AI and machine learning for effective and efficient financial crime compliance and to eliminate the hold-ups and bottlenecks caused by missing or incorrect information will be required.
Further supporting SWIFT's future of cross-border payments is the requirement for modern, open, globally adopted standards, that allow smaller markets to internationalise faster. The standards will also have to allow larger markets to transfer value through the entire payments chain.
Embracing new technologies that serve a real purpose to resolve industry problems, SWIFT said, can be done through the deployment of "cutting edge technology", alongside a "vibrant and innovative ecosystem, with API technologies supporting "open, agile architectures".
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