Financial Messaging Solutions

The 3 Key Trends in Financial Messaging Solutions

The challenge

As the demand on the inter- and intra-bank relationships is increasing, the corporates are also added to the equation and occasionally the pressure on the financial organizations to create a more effective financial messaging system is showing its face more and more everyday. SWIFT, which was always about the banks, now has to enlarge its scope to answer the fragmented requirements of the global messaging formats and standards.

To address the challenge, all important matters must be taken into consideration: regulation, security, customer experience, and technology. To this end, corporations and the banks came together to understand the challenges and come up with the key trends shaping the financial messaging solutions for 2020.

3 Key Trends in Financial Messaging Solutions

  •  Simplification of KYC (Know Your Customer) processes
  • Increase in the necessity of tracking the end-to-end payments
  • Alteration in the image of trade finance with digitization and automation

1. Simplification of KYC (Know Your Customer) processes

In the compliance area, one of the biggest issues that both financial institutions and the corporates face is the KYC. The fact that there are many different sources on which the data is constantly diffused which also causes the incompleteness and loss of validity by becoming out of date occasionally results in costly delays.

Since KYC is a huge topic for both the banks and the corporates, it brought together both groups to seek for a common solution and standards from which different stakeholders and countries can benefit from. According to a recent survey, requirements to be able to comply with the KYC requests is more challenging today when compared to five years ago. Another point is that the delays in KYC processes affect the account opening trends and the decisions of the treasurers whether to work with a specific bank or not. As a result, the advantages of making an investment in the collection of data, standardizing and verification has become a hot topic.

Acknowledging the fact that these challenges and their impact on their businesses and relationships, both the banks and the corporates agreed that the KYC processes are to be simplified.

As SWIFT’s Head of KYC Compliance Services Marie-Charlotte Henseval puts it: “The expansion of our KYC Registry to corporates is the result of close collaboration with our community of banks and corporates. By opening the registry to corporates, we are empowering banks and corporates to tackle the inefficiencies arising from the lack of standardization across data and jurisdictional requirement”

2. Increase in the necessity of tracking the end-to-end payments

With the increase in internationalizing the financial operations, the need to track the transactions has become more vital. Especially, the speed, certainty and fee transparency are the key elements to make sure that the cash management processes are held effectively. Being able to check the status of the international payments and how much the fee will be for the transactions are essential to improve both the user and corporate experiences.

Banks using the SWIFT gpi system already provided better service to their customers making sure that they can track the information through online banking portals and see the payment flows. However, corporates that work with different banks, need to log in to each portal to be able to keep track of their transactions and payments.

To address the issue, the Head of SWIFT gpi for corporates Sebastian Rojas stated that big corporates aim to automate their treasury processes while at the same time they are looking forward to receiving and integrating the valuable payment data like tracking, fees, and performance into their systems so that they can have better visibility on their payment procedures, notify the delays in the process and finally address the problems or demands without a need to communicate with their banks.

3. Alteration in the image of trade finance with digitization and automation

There is a necessity in establishing new trade finance ecosystems because the current trade finance businesses still rely mostly on manual processes and paper-based exchanges. So, issues like transparency and viability are the most important challenges directly influencing the growth of this business.

As a solution, in the recent years, the industry has started to look for new trade platforms; however, they remained inefficient in achieving a meaningful adoption rate to provide what is needed. So, the current platforms are deficient in terms of compliance with the standards and inter-connectivity to deliver a wider adoption.

With the collaboration of the corporates and the banks, it can be possible to explore what can be achieved with the standardization and co-creation in international payments and how it may support the further development of trade finance.

Collaboration is the key for solution

Together with the inclusion of the support and collaboration of the corporates into the equation, the challenge of disseminated data and transparency can be tackled by focusing on a more unified and standardized point of view. To this purpose, banks and corporates can understand and decide on what to be worked on and what are the possible solutions.

As for the financial messaging, there are three main trends that are discussed as hot topics. First of all, to be able to address the problem of fragmentation and incompleteness of data, KYC processes must be simplified. Secondly, end-to-end payments tracking is increasingly becoming a must-have because of the need for precision and transparency. And finally, to change the face of the trade finance, together with the collaboration of the banks and the corporates, digitization and automation are required.

To make sure to deliver a smooth and efficient experience in the financial transactions, all the stakeholders should be willing to embrace the engagement of technology, regulation and customer needs.

Tuncay Coruh, Product Manager

2020-01-16T11:04:24+03:00
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