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SWIFT released today the names of the ten Chinese banks that have gone live on its global payments innovation initiative (gpi) since its launch in May 2017.
The banks are: Bank of China, Industrial and Commercial Bank of China, Bank of Communications, China Minsheng Bank, China Guangfa Bank, China Construction Bank, Bank of Jiangsu, Shanghai Pudong Development Bank, China Citic Bank, and China Zheshang Bank. Seventeen other Chinese banks have committed to SWIFT gpi in China and are in the process of going live. Together, these banks represent an estimated 86% of cross-border payment traffic conducted by Chinese banks in mainland China. In addition, a number of foreign banks with mainland presence are already on the SWIFT gpi network.
"By affirming their commitment to come onboard SWIFT gpi, the 27 Chinese banks that have signed up so far are sending a strong message to the rest of the world. The seamless connectivity, optimised financial products and services, and presence of ongoing community engagement and standards afforded by SWIFT and its gpi platform, are crucial in facilitating business between China and the rest of the world, and in doing so, set a new precedent for cross-border payments globally," said Alain Raes, Chief Executive of EMEA and APAC, SWIFT.
SWIFT gpi is seen as a key player in China's Belt and Road Initiative (BRI). It is designed to improve the customer experience in correspondent banking by increasing the speed, transparency and predictability of cross-border payments. The service offers Chinese banks faster transactions, and also improves the overall banking experience by creating predictable settlement times, transparent bank fees and FX rates, and clear statuses. This in turn leads to shorter supply cycles and faster shipping of goods on the customer end.
China's BRI currently covers over 60 countries and represents a third of the world's trade. The discrepancy in standards and regulation across the BRI introduces a number of challenges, such as the absence of a unified communications framework and compliance issues. Strengthening financial connectivity on the BRI routes is vital in ensuring its success in driving trade and stimulating economic growth across Asia.
"The financial industry has an important role to play in realising the full potential of the Belt and Road Initiative, from building and maintaining effective infrastructures and processes to support capital flows; to working towards common standards and mitigating risks. At SWIFT, we are committed to working with Chinese banks to help shape the future of correspondent banking in China and beyond," added Mr. Raes.
Despite initiatives to develop the RMB at an international level, China remains a largely dollarised market. As of June 2017, 98% of the payments between the United States and China are performed in US Dollars, and the RMB is used for more than 2% of payments to China in most markets, Taiwan being the only notable exception. The improved connectivity and the enabling of more products and services dominated by the Chinese yuan will also help China with its RMB internationalisation efforts.
Launched in 2017, gpi already accounts for 25% of SWIFT cross-border payment traffic. More than 165 banks, representing 80% of SWIFT's cross-border payments traffic, and including 49 of the world's top 50 banks, have signed up to the service. To date, 50 million gpi payments have been processed, with hundreds of thousands of payments sent daily across 350 country corridors, in more than 100 currencies. In major corridors, such as USA-China, gpi already accounts for more than 40% of payment traffic.
In March 2018, SWIFT announced the extension of its gpi Tracker to cover all payment instructions sent across the network, enabling gpi banks to track their SWIFT payment instructions at all times, and giving them full visibility over their payments activity. As a direct result of the speed and transparency afforded by gpi, banks using the service have seen a significant reduction in frictions and as much as a 50% fall in their enquiry costs.
As a next phase, SWIFT has created a work group comprised of banks from China, Australia, Singapore and Thailand to explore if the domestic legs of gpi payments can be further sped up. The work group will define a set of business rules to look into how domestic business process frictions can be overcome to facilitate faster (or close to real-time) payments. The working group will also identify domestic real-time payment systems that will carry the gpi information and unique end-to-end transaction references (UETRs), to allow the reach of the gpi service to extend into domestic payment system environments.
Editor's Notes:
Quotes from SWIFT gpi banks in mainland China for press use:
"SWIFT gpi is a vital innovation in the international payment arena. Bank of China as one of the initiating banks involved is pleased to witness more and more Chinese banks participating in it. We would like to take this opportunity to grow our involvement in gpi together with other Chinese banks in order to serve Chinese enterprises that are "Going global" and the construction of Belt and Road initiative by enhancing cross border service capability."
Mr. Sun Shangbin, Deputy General Manager of Clearing Department, Bank of China
"SWIFT gpi is very important to the future of cross-border payments. This service will drive greater efficiency and transparency of cross-border payments, bringing significant advantages for banks and improved experience for our customers, particularly in Asia where cross-border business activity continues to be strong. Moreover, ICBC maintains a leading position in payment market, and with our service network expanding to 45 countries and regions, we believe this initiative will benefit our correspondent banking clients substantially in efficiently managing their payments and receipts, too. ICBC will continue to work with SWIFT using the new technology to meet the needs of our clients."
Mr. Peng Hua, Deputy General Manager, Operation Management Department, Industrial and Commercial Bank of China
"Believing in the concept 'From the customerFor the customer', we constantly strive to improve the experience of cross-border payments. After the successful launch of 'Minsheng Global Fast Payment', we have been actively exploring the new functions of phase two of gpi and applying blockchain technology in cross-border remittance to build the outstanding brand image of China Minsheng Bank in the cross-border finance field."
Dr. Xu Jie, Deputy General Manager, Transaction Banking Department, China Minsheng Bank
"CGB domestic and overseas branches simultaneously launched SWIFT gpi in January 2018. SWIFT GPI enriches CGB's Instant-Pay product mix in terms of enhancing the payment efficiency, ensuring the transparency of the fee deduction and providing an end-to-end payment tracking, to deliver more transparent and efficient services for our customers."
Mr. Chen Bing, Deputy General Manager, Trade Service Center, Guangfa Bank
"Thanks to SWIFT's API solutions, China Construction Bank currently offers our customers at home and abroad global comprehensive payment and settlement options in the form of SWIFT's gpi. Our mission at China Construction Bank has always been to better the payment experience for our customers. To that end, we are committed and looking forward to the next milestone on gpi - the launch of a real-time gpi tracker for all payment instructions sent over SWIFT gpi. We are confident that this will offer an enhanced cross-border payment experience for our customers."
Li Yuexi, Deputy General Manager, Channel and Operation Management Department, China Construction Bank
"BOJS' service motto is "clients first, value creation" and we always look to deepen innovative efforts that are focused on high quality control, and display new initiatives, while endeavouring the provision of a first class cross-border payment solution to our customers. We are dedicated to becoming a refined listed bank known for our specialisations, intelligence, comprehensiveness, and efforts towards internationalisation. With the successful implementation of SWIFT gpi service, we will continue to improve international payment products, further satisfying clients' diversified needs, and helping them benefit from a more advantageous cross-border payment experience."
Mr. Zhao Hui, Deputy Director, Bank of Jiangsu
"SPD Bank makes active efforts to embrace and implement SWIFT's gpi project, since we believe that it is in line with the Bank's vision to be customer-centric and matches the bank's aspiration to develop itself into a leading digitalised bank. The SWIFT gpi project will enhance the bank's competitive advantages in cross-border payment by increasing process efficiency, transparency and security, and therefore improving customer satisfaction. SPD Bank will actively participate in gpi multilateral cooperation, providing outstanding cross-border payment service featuring convenience, efficiency, transparency, security, and intelligence to meet customers' needs."
Mr. Pan Peidong, General Manager, Operations Management Department of SPD Bank Head Office
"We are proud to be one of the GPI banks worldwide who offer an enhanced cross-border payments experience to customers. Based on 1,400 outlets in China and nearly 2000 correspondents abroad, and also rely on the customer-oriented brand idea, our bank is aimed to provide customers with high-speed and transparent payments in future by GPI functions."
Mr. Zhang Xuqing, Assistant General Manager, International Business Division, China Citic Bank
"By establishing new cross-border payment standards with gpi participating banks, the SWIFT gpi program has significantly improved cross-border remittances service in terms of speed, transparency and security. In recent years, CZBANK has rapidly built a "highway" for international business and has initiated a featured gpi service covering "full-currency,full-channel". It has launched five functions as speed remittance, global tracking, and SMS and etc, for a better customer experience."
Ms. Huang Wenling, General Manager, International Business Department, China Zheshang Bank ---
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