How small banks in Lebanon can drive growth in their corporate client base, using SWIFT GPI

Micro, small, and medium sized enterprises (MSMEs) represent well over ninety percent of Lebanon’s firms and are integral to the success of the nation’s economy. According to the IDAL Investment Report 2018, Lebanon has the highest rate of Nascent and New Firm Entrepreneurs in the MENA region.  What are the priority banking requirements of this sizeable target audience? Faster payments. In a recent BNP survey; 43% of SME’s globally said say that being able to send and receive payments in real time would be essential to the success of their business.

SME’s tend to be associated more with local trade, however in Lebanon the volume of imports is over 5x larger than the volume of exports. Given this very skewed balance of trade, banks should look at the top import partners of Lebanon to better understand what payment products will enhance the customer experience.

EXPORTS

IMPORTS

Lebanon’s largest import trading partner is committed to SWIFT GPI

Lebanon’s top import partners (annual values) are:

• China $2.14bn
• Italy $1.39bn
• USA $1.28bn
• Greece $1.1bn
• Germany $1.06bn

Ten Chinese banks have already gone live with gpi  and this includes three of the country’s large state lenders, namely Bank of China, Industrial and Commercial Bank of China and China Construction Bank. A further seventeen other Chinese banks have committed to SWIFT gpi,

SWIFT gpi is seen as improving the customer experience in China’s Belt and Road Initiative (BRI) by increasing the speed, transparency and predictability of cross-border payments. 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.
• A full 50% of US-China cross border flows are now done using SWIFT GPI.

Lebanon’s other trading partners; Italy, Greece and Germany, are all within Europe. The Single European Payments Area (SEPA) protocol means settlements can be cleared in one day, when transacting in Euros.

Lebanese firms that want to maintain and grow business with these trading partners need to be able to operate in a similar payments environment, with same day settlements and full transparency into fees.

WHAT IS SWIFT gpi?

SWIFT gpi is the best way to manage cross border payments for financial institutions and businesses all over the world. SWIFT gpi offers:

SPEED

Same Day Settlements.

View incoming payments before a credit is posted to a client’s account.

TRANSPARENCY

End to End visibility through the chain, with insight into charges and FX rates

PREDICTABILITY

Payment Tracking and instant access to payment status including rejects and returns.

How Lebanese Banks can take Advantage

With the exception of BLOM Bank, who announced they were live with SWIFT gpi on 15th October 2018, most Lebanese banks haven’t completed their business use case for SWIFT, despite having large in house IT teams, and 3rd party payment vendors.

By November 2018, all banks have to reach a minimum level of compatibility (even though full adherence for gpi isn’t mandated until 2020). This requires the bank to be able to receive and pass along SWIFT messages in their new format, even if the bank isn’t fully live with gpi yet.

This represents a great opportunity for smaller banks to compete at the same level by moving quickly and getting ahead of the curve. The promise of gpi is an easy sell and can be marketed extensively to existing and new clients with little difficulty in customer comprehension.

Technical Implementation:

Banks looking to implement gpi need to either have in house resources, or; they need to outsource development to a third party, rather than relying on a SWIFT service bureau.

In Lebanon, FinConnect is a dedicated SWIFT application developer. Designed especially for small banks that don’t have in house IT resources, but who are already subscribed to the SWIFT service, FinConnect can deliver gpi readiness in 25 days including the testing scenarios requested by SWIFT.

How does FinConnect work with Banks?:

We nurture banks from initial subscription to SWIFT gpi, through compliance testing and launching of the solution. FinConnect also trains bank staff on gpi business rules and how to maximize gpi usage for better cash management.

No need to allocate IT resources for gpi development or integration, we do all the heavy lifting for you!

FinConnect gpi Features:

• Adaptation of gpi rules for your business requirements
• Seamless integration with Core Banking systems and the SWIFT network
• Immediate full automation of payments (Outgoing / Incoming)
• Execution of all SWIFT mandated testing scenarios for compliance
• Access to gpi Observer: view gpi compliance of banks around the world.

Want to learn more?

Learn how your bank can compete in 2019 by booking a free FinConnect gpi demo today