65% of banks say legacy systems holding back Swift gpi adoption
Almost two thirds of financial institutions say that their legacy systems are their greatest challenge when preparing for Swift gpi.
That’s according to a poll conducted by FinTech Futures and Volante Technologies during a webinar on modernising payments held on 14 May.
The poll revealed that 65% of participants believe that integration with legacy software would be their main concern, with 22% citing budgetary constraints, and 10% named human resource concerns.
Marco Hughes, global head of core payments at HSBC, says that the number reflected the fact that “this is the life” in the sector.
“There are always budgetary concerns of course, after all you must pay for things, but integration with legacy systems – and let’s face it we all have legacy systems whether they’re ten years old or one year old – is a huge challenge.”
“It’s often not just one legacy system either, it’s often integration with multiple systems as well and all the spaghetti in between. Just trying to map it out and making it as real time as possible is a real task.”
Domenico Scaffidi, business development director and market infrastructure expert at Volante Technologies wasn’t surprised about the 65% figure.
“I think it really is the biggest challenge out there for banks. It not easy to, first of all, understand the requirements of integration and then go ahead with a strategy of interoperability. The important thing for banks to realise though is that they are not alone, they have colleagues and competitors going through the same thing, and there are also plenty of tools out there in the market that can help them with their journey towards interoperability.”
Swift promises on its website that gpi is “the biggest thing to happen to correspondent banking in 30 years”. The initiative promises quicker payments with full transparency on accompanying costs, while providing on-the-spot information on the status of transactions.
Yet, there may be some institutions that either believe that the benefits are not worth the transition, or believe that there aren’t enough checks in that ‘pros’ column to kick things off.
HSBC’s Hughes believes that the potential of gpi can’t be overstated. “It touches everything from supply chains to your working capital cycle. From a transparency perspective, allowing our clients to see the status of their payments is massively helpful to even the largest corporates.”
Hughes adds that HSBC is experiencing fewer incoming queries to its contact centres since the implementation of gpi because their clients are able to check on the payment lifecycle stage themselves.
Scaffidi outlined a series of benefits on the webinar, including the pre-validation of payments, the elimination of errors and omissions in payment messages, the adaptation of universal confirmations, and instant cross-border transfers.
Kicking things off
A second poll conducted during the webinar found that just under a third of financial institutions watching had not kicked off their gpi plans at all.
In the same poll, 39.7% of participants shared that progress is underway on the implementation of gpi, while 22% reported that they had already finished.
Hughes says that he was slightly surprised by the number of firms who have not kicked off the transition.
“Of course there is a vested interest, even for a large bank like ours, for having increased participation. If everyone is using it then it becomes more of a standard and becomes a benefit for everybody.
“We went through some serious thinking as to the benefits of this solution. Other options might be available for example. But it has been a transformational change for us.”
A new normal
Nicole Stumpf, Swift gpi lead for cash management at Deutsche Bank, says that her firm considers gpi as the “new industry standard and the new normal” for single high value processing.
“I personally find it rather impressive that an industry initiative that is still rather young has really resulted in what I would call a paradigm shift in how the processes speed up and how transparency increases. “I’m always quite impressed whenever Swift shares its user statistics, especially when it comes to the adoption rate of financial institutions to the initiative.”
“I strongly believe that this will grow further going forward and I think we will definitely see those who have not started kick things off in the near future.”
For Domenico Scaffidi, business development director and market infrastructure expert at Volante Technologies, the numbers from the poll were a positive, though the number of respondents who had not started their project surprised him.
“I don’t think there is too much time to lose. This is something that corporates for many years have wanted, especially when wanting to move liquidity across borders in real-time. Gpi is their solution, and so I expect there will be some pressure from that side.”