Regulatory scrutiny around KYC (know your customer) and AML (anti-money laundering), and changes in consumer and client behaviour, are also forcing the industry to review traditional banking models. The banking sector is facing these challenges head-on, developing a new, more innovative and dynamic payments landscape.
Both consumers and corporate clients expect frictionless payment experiences which are transparent, predictable and fast. However, the wider post-crisis regulatory push means compliance is taking up more of the payments professional's time with data privacy, security and resiliency as key concerns.
Managing financial crime compliance requirements and addressing the cyber-threat in the high-speed world of real-time payments is becoming ever more challenging. Dealing with these threats at a community level is the only way to protect the financial ecosystem.
Additionally, technological advances bring powerful and flexible new capabilities. Payments actors must keep up with the pace of change and prepare to remain competitive.
Policy makers in Africa recognise the role payment systems play in fostering and deepening economic development. African countries have invested in their financial market infrastructures, specifically pan-regional systems, using Swift’s messaging network for safe and secure delivery of payment and settlement messages. The South Africa Development Community's (SADC's) real time gross settlement (RTGS) and East African Payment System are two such examples.
Swift’s recent white paper on African payment flows showed an increase in intra-Africa payments clearing and trade. Regional payments systems continue to support that growth and several regions are now looking at how these could be interconnected to allow payments to flow from one system to another and provide pan-regional settlement capability.
Historically, cross-border payments have been relatively slow, lacking in transparency and with unpredictable fees. Swift’s global payments innovation (gpi) service seeks to improve customer service for cross-border payments.
More than 180 transaction banks have signed up to the service, with more than 80 using Swift gpi to exchange hundreds of thousands of payments a day across 700 country corridors. African banks are already live, including Standard Bank, Absa Bank, FirstRand Bank and Nedbank.
Significant strides are being taken for domestic instant payments (IPs). Australia's recently launched New Payments Platform was designed to remove inefficiencies and improve how consumers, businesses and government departments transact with one another. Swift is also developing an instant messaging solution for Europe that will provide connectivity to both EBA Clearing's RT1 instant payments system and the Eurosystem’s Target Instant Payments Settlement Service (Tips).
The next phase will be to focus on cross-currency instant payments, but this will come with challenges at the technical and operational level as well as with FX requirements.
In Africa, Swift and other partners have been pivotal in developing the foundation for cross-border, cross-currency systems through the SADC’s RTGS and EAPS initiatives. However, moving this process into the realm of instant payments is still a journey which needs to be taken together.
Denis Kruger is the head of Sub-Saharan Africa at SWIFT.