Singapore banks join global pilot to boost cross-border payments

Singapore banks join global pilot to boost cross-border payments

Singapore - SINGAPORE banks are among 45 global institutions testing out a Swift service that would improve price transparency in cross-border payments, as lenders band together to find ways to make correspondent banking more efficient and less costly, a senior executive from Swift said last Friday.

The pilot - known as the global payments innovation initiative - is meant to offer better tracking of payments for corresponding banks, fee transparency, as well as same-day use of funds. Banks that sign on to the programme effectively agree on business rules captured under multilateral agreements, creating standardisation. Other banks that have signed on include Citibank, Bank of New York Mellon, Bank of Tokyo-Mitsubishi, and Bank of China.

As it is, cross-border payments via corresponding banking have been slow, and treasurers find it difficult to predict both the costs and the time that such payments would take.

"The challenge has been around the fact that banks have not, among themselves, always collaborated to bring full transparency on this subject," Stanley Wachs, global head, bank engagement, payments innovation, at Swift, told BT. "The adoption by these banks, to come together and say 'we are collectively aligned to do something about this', is in itself an amazing milestone when it comes to global payments innovation."

The programme comes amid higher regulatory focus on cross-border payments executed by banks, and higher compliance costs.

Global banks have been trimming relationships to ensure that they work only with counterparties that comply with the more developed rules surrounding correspondent banking. This has also meant that overall standards for services have been lifted, and there remains pressure for greater efficiency.

This article was first published on January 25, 2016.
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