At the same time, companies are expecting to receive greater clarity and more comprehensive information from their banking partners. The complexities of trade, particularly as companies go global, mean that treasurers need to be able to easily track the status of all their transactions.

Transparency supports a company's working capital efficiency, obviously, but that's not the only benefit. Payments transparency also helps companies nurture better relationships with their trading partners. For instance, if a buyer gets confirmation that payments to a supplier have been both made and received successfully, it knows how to proceed in building and sustaining a healthy trading relationship for the future.

And the last—but by no means least—area in which corporate treasurers are expecting more from their banks: Companies are demanding that their banks provide comprehensive, reliable, and visible information on banking fees.

In light of these growing customer demands, most banks are working hard to provide corporate customers with a modern, rapid, and user-friendly payments experience. They cannot run the risk of falling behind in the payments race. This is all the more crucial, given the pressure that the global correspondent banking network is already under from increasing compliance costs, regulatory intensity, consolidation of correspondent networks, and disintermediation.

Of course, within the SWIFT system, the process of actually sending a payment already happens relatively quickly. Standardized financial messages identify more than 11,000 banks and speedily facilitate the movement of funds between some 200 countries worldwide.

Yet procedures outside the core transfer of funds can still hinder a straight and smooth process. Clearing, payments checking, compliance processes, and confirmation can all eat into a corporate banking customer's precious time—not to mention threaten a company's liquidity flows. For instance, if a bank is to comply with regulations, its employees must perform due diligence checks on the bank's customer and its customer's customers.

Similarly, confirming the status of payment transactions—that is, noting when they have been sent, received, and cleared—can be a cumbersome process. Faster, automated flows of data between banks stand to speed up such procedures.

Transparency in the SWIFT Global Payments Innovation Initiative

That is why SWIFT's GPI initiative marks such an important milestone for corporate treasury. Announced at the end of last year, it goes a long way toward removing the bottlenecks that slow down cross-border payments. The initiative, which embarked on its pilot phase in spring 2016, is already supported by over 70 global banks—Commerzbank among them.

At the heart of the scheme is a new multilateral service level agreement (SLA) rulebook, which commits banks using the SWIFT platform to meet improved customer service standards when facilitating payment transactions.

One major pillar of the SLA rulebook is transparency. For instance, under a mutually agreed set of business rules, banks must offer their customers full visibility on transaction fees. This means providing insight into the fee structure and highlighting any fees that might otherwise be hidden. This improved transparency is enabling customers of the banks participating in the pilot project to better measure their transactions' cost and more effectively prioritize their banking relationships.

Meanwhile, SWIFT's initiative also ensures that banks offer their customers a wealth of information on payments. Banks must provide extensive end-to-end payment tracking. In this respect, SWIFT is developing a database, hosted in the digital “cloud,” allowing banks and their corporate customers to track their funds from the initial transfer to confirmation of clearance in the beneficiary's account. This will provide key insights into the status of payments, using a unique reference number to identify when they have been sent, received, and cleared—in the sort of way an international shipping company may provide a parcel tracking service to its customers. The result is that a buyer can enjoy confirmations that its creditor has been paid, and companies on both ends of a transaction will be able to dedicate fewer resources to investigations into the causes of slow payments.

This new transparency may improve interactions—and build trust—among banks, sellers, and buyers. Thus, the initiative has promise in enhancing long-term trading relationships and optimizing cross-border trade.

SWIFT GPI Also Enhances Payment Speed

A second major goal of SWIFT's new SLA is to ensure that banks provide their customers with same-day access to funds.

Clearly, this will significantly improve the payment experience for customers at both ends of a transaction. An exporting company, for example, can rely on having money in its account (and thus being able to use it) the very day its transaction is processed. Such a simple yet vital development can help enhance a company's liquidity, while boosting the customer's overall banking experience.

While banks have always wanted to offer the fastest possible payment experience to their customers, cross-border commerce can still be slowed down given the number of correspondent banks involved. The reason is that each bank in the chain may vary the speed at which it processes transactions, calculates fees, and draws up payment status information for its customers, all of which can result in unexpected delays.

Yet by engendering a standardized, consistent process across all banks involved, SWIFT's GPI initiative promises to ultimately speed up access to funds for the end customer.

Achieving these gains does not require further technological innovation from the banks. Instead, the scheme builds on existing banking infrastructure, and SWIFT's proven messaging technology, to ensure that banks best use their resources to service their customers. Certainly, some banks may currently take several days to clear cross-border transactions, but with over 70 major global banks currently participating, the drive towards best practice will doubtlessly grow.

SWIFT Improvements Take the World by Storm

Banks participating in the GPI initiative must show that they can meet SWIFT's requirements in terms of both speed of payments and transparency. After all, the scheme, is, at its core, a commitment to customer service. And the initiative's multilateral, open model is designed to be inclusive: It's offered to any bank worldwide that can meet the new standards of clarity and speed in processing transactions.

Given that the major transaction banks already signed up to SWIFT GPI cover around three-quarters of the total cross-border payments currently sent over the SWIFT network—in nearly 200 countries worldwide—progress is well under way, and the advantages should help spur others to follow suit. The pilot project ends in December of this year, with the building blocks already in place for subsequent steps in 2017.

For banks, the initiative represents a decisive move toward championing best practices globally. In many countries, the banking infrastructure and regulations already support efficiency and transparency in domestic payments. The SWIFT GPI initiative has the potential to drive best practice on an international scale.

It also represents an opportunity for banks to build and secure their trade business. By committing to the SWIFT standards for timeliness and transparency in all payments, banks signed up to the initiative are better placed to both retain customers and attract new ones. At a time of increased competition for margins in world trade, the opportunity to grow volumes and market share in the transaction business is worth grasping.

The future of global trade depends on correspondent banking, so banks must strive to raise standards for their corporate customers. SWIFT's GPI initiative offers global banks a means of demonstrating their commitment to transparency and same-day payment clearing—thus, a means of differentiating themselves from the competition.

For corporate treasurers, banks' participation in the SWIFT GPI project lays the groundwork for great improvements to their own payment processes.

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Ingrid Weisskopf is head of cash products and advisory FI at Commerzbank. She took up the position in Frankfurt, Germany, in 2009.