Sibos 2023: Cross-border payments dominate day one of Sibos with Swift-Wise partnership announced

Swift’s has partnered with UK-based fintech Wise to offer more cross-border payment options to financial institutions and their customers.

The partnership was announced during the opening day of the annual Sibos conference, which is currently underway at the Metro Toronto Convention Centre in Canada this week.

Financial institutions will now be able to direct Swift payment messages to Wise Platform via the network’s Correspondent Services solution, without the need to implement further changes to their own systems.

Wise Platform, which is tailored to banks and major enterprises, is due to leverage “advanced Swift capabilities”, including cloud technology, API connectivity and payment pre-validation.

It will also adhere to the standards outlined by the Swift GPI, most notably through a payment status tracker to allow for end-to-end visibility across both networks.

Steve Naudé, managing director of Wise Platform, anticipates that the partnership will make international payments “more convenient, faster and lower cost for banks, without necessitating a major tech build”.

Adding to this, Thierry Chilosi, chief strategy officer at Swift, claims that the collaboration proves Swift is “the bedrock” for industry-wide cross-border payment capabilities, and that it will “enhance the options available for customers across the globe”.

The next evolution of cross-border payments

The announcement between Swift and Wise comes in tandem with Sibos’ day one agenda, which notably included a panel seeking to answer the question: What’s next for low-value cross-border payments?

Chairing the panel was Swift’s global payment strategy director, Kevin Tay, who was joined by Gayathri Vasudev, global head of cross-currency payments at JP Morgan; Jean-François Mazure, head of cash clearing services at Société Générale; Petra Plompen, senior manager at EBA Clearing; and Simon Ong, global head of financial institutions group at DBS.

In recognition of the increase in cross-border transactions, the panel sought to discuss how correspondent banking has evolved to facilitate this increase, as well as the main takeaways from emerging alternative models.

Speaking on correspondent banking’s shift in this area, Mazure attributes its success in facilitating low-cost cross-border payments to volumes and operational efficiency.

“At the end of the day, we all see the pressure around prices. And if we want to meet our end users’ expectations, it is very true that we will have to offer them better prices to be achieved through the decrease of our internal costs,” he shared with the panel.

In an attempt to meet end users’ expectations, and particularly those of SMEs, banks are increasingly turning their attention towards ways of facilitating cross-border payments for the masses.

JP Morgan, in particular, has aligned its expedite product with the Swift Go solution to enable its clients to implement a low-value, cross-border payment offering.

On this, Vasudev explains how the focus of banks’ cross-border payment offerings has traditionally landed on sectors like trade and workers remittances, but goes on to emphasise that this is now “rapidly changing”.

She told the audience at Sibos that the industry can expect to see “many more flows from big to small” in the immediate future, especially as SMEs start to demand more from their payment providers.

“Customers are demanding the same kind of experience that they see in domestic payments in the cross-border payments space. So that’s why I think more people are paying attention to the segment,” Vasudev said.

The rise of alternative models

Once confined by compliance requirements and the pursuit of pure profitability, the liberated market for low-cost cross-border payments has opened the door for both non-bank participants and alternative payment models.

During the panel, Tay gave multiple examples of the continued interlinking of instant payment systems, notably the now live bilateral linkages between Singapore and India, and Singapore and Thailand. Concerning the panel specifically, DBS’s Innovation Hub is testing the waters in this area though its Project Nexus, while EBA Clearing is connecting users in the US and Europe through its immediate cross-border payments (IXB) pilot.

Reflecting on the infrastructure provider’s IXB pilot and the challenges presented by the use of alternative models, Plompen told the panel that “technology is not the challenge”.

“What we learned is that you really need to do this together with the banks that are using this, to show that you can meet their requirements and our user requirements,” she said.

“And also, compliance aspects can be challenging. And that’s really something where the public sector can really contribute to ensure that there’s good alignment in the regulatory frameworks, so that it can be as efficient as possible. And that will be the place I think for the industry to deliver the innovation and the security solutions that are needed.”

Offering a perspective on the unique challenges of alternative models within the Asian market specifically, Ong says the challenges in establishing models on a bilateral basis occur as a result of the region’s differing diversity, governance and regulatory models.

“To really scale into a many-to-many type model, this is going to take quite a lot of time and a lot of focus at the government level,” he said as means of a solution.

With day one of Sibos coming to a close, the panel and newfound partnership between Swift and Wise presents the beginning of an intriguing and highly thoughtful agenda that will no doubt extend beyond the walls of the Metro Toronto Convention Centre and into the initiatives of the industry at large.