Cross-border volumes have increased dramatically over the last few decades, as evidenced by the mobility of goods, services, capital, and people, and are set to increase further.
According to GlobalData, the total volume of cross-border transactions globally is forecast to rise from $106.873bn in 2025 to $152.665bn by 2029. This trend highlights these transactions’ importance and contributions to global economies. In parallel, the mechanisms facilitating cross-border payments have also improved significantly, with initiatives such as Swift GPI and Payment Pre-validation helping to smooth the execution of payments.
Regulators and the G20 are eager to see continuing improvement in cross-border processing. Nevertheless, the current state of payment exceptions and investigations (E&I) hinders a payment’s journey, pushing demand for streamlining in the processes that arise when managing E&I events.
As Shirish Wadivkar, Global Head of Transaction Management, Swift, points out: “Inefficient investigations processes are impacting the industry greatly in terms of cost and time and drastically affecting the customer experience. Our enhanced solution addresses the main pain points in investigating incidents, helping our community make gains in efficiency, time, and costs to provide the experience that customers expect.
“It’s not only a great example of how the ISO 20022 standard can help our industry deliver better user experience by removing friction and providing transparency, but is also a case in point as to how Swift is committed to interoperating an increasingly complex financial ecosystem by extending the benefits of our solutions across networks.”
For financial institutions, E&I management continues to be a significant issue, impeding progress and creating payment inefficiencies and costs, resulting in longer resolution periods. This is true for both banks and corporates and affects numerous networks and technologies.
The E&I pain points
There are several reasons why an E&I case might be triggered in a cross-border transaction – incorrect payer details, missing data or information, suspected fraud or funds linked to illicit activities, regulatory compliance issues, or merely the inability to process a payment due to errors in the payment instructions. If an E&I event arises, the result is additional time and costs for all parties involved, delay in the payment execution, and increased customer dissatisfaction.
A detailed report titled “It’s time to transform exceptions and investigations,” recently published by Swift, highlights several persistent issues with E&I processes and provides data on the continuing impact of the “E&I bottleneck” on financial institutions. As an example, while payment settlement times may have decreased by 75% compared to five years ago, E&I resolution times remain unchanged, with the time taken to resolve investigations ranging from five to ten days.
It is estimated that inefficiencies in E&I resolution costs the financial industry $1.6bn per year, and a switch to more efficient E&I processes could result in savings of $332m in operational costs and $270m in liquidity costs per year, posing potential annual savings of $600m to the industry.
A new era for payment investigations
In 2023, representatives from 17 leading banks collaborated to deliver a new E&I design, with the resulting Case Management solution being tested, validated and implemented by over 30 financial institutions in a closed pilot phase.
Consequently, Swift has greatly enhanced its Case Management solution to streamline payment investigations – significantly improving how financial institutions can manage payment exceptions and bringing the payments industry closer to frictionless cross-border transactions. By harnessing the industry-wide unique end-to-end transaction reference (UETR), Case Management could help streamline E&I processes across any network that uses it.
This network-agnostic solution uses a centralised message orchestration model that employs ISO 20022-compliant messaging language and structure, providing parties involved in the transaction process with the ability to exchange messages in a standardised format, thereby decreasing response times, creating traceability throughout the payment journey, and reducing customer dissatisfaction.
Addressing the pain points
Case Management provides features to mitigate E&I events, automatically checking each stage of a cross-border transaction, thus addressing the pain points in E&I.
- Business validation checks – allows only valid cases to proceed. Investigations that contravene established business rules are automatically rejected.
- Pre-check logic – removes unnecessary manual input. Swift’s payment tracker data automatically responds to specific requests based on the underlying payment status.
- Data pre-population – saves time and minimises errors. Relevant fields in investigations are auto-filled using information from related transactions.
- Smart routing – avoids unnecessary back-and-forth communication. Cases are immediately directed to the appropriate party.
- Automated status reminders – resolves cases faster. Built-in notifications ensure that cases receive timely attention.
- End-to-end tracking – fosters accountability and transparency. By leveraging unique investigation references, all parties have real-time visibility into an investigation’s status, fostering accountability and transparency.
- Structured information – increases automation when dealing with requests. Using ISO 20022, investigation requests and responses use structured codes, as opposed to the older unstructured MT199 formats.
However, Case Management is not just about solving E&I transaction issues, it unlocks efficiency and cost-saving opportunities – both quantitative and qualitative.
Increasing operational efficiency through automation reduces the time and effort required to process exceptions, freeing up resources for higher-value tasks. The customer experience is also much improved, as faster resolutions and greater transparency create higher client satisfaction and trust. Furthermore, a payment may travel through multiple regulatory regimes so financial institutions can better align with compliance requirements with improved tracking and structured processes, ensuring that the payment is not stopped or delayed due to uncertainty over compliance. Additionally, Case Management provides significant cost savings by minimising manual workloads and communication delays, directly lowering operational costs.
The leap to ISO 20022
The key enabler of Case Management is the integration with ISO 20022, the emerging global standard for financial messaging. ISO 20022’s structured and data-rich format augments the automated features, ensuring seamless interoperability and accurate data exchange between institutions. This alignment also positions financial institutions to succeed in the ongoing global ISO 20022 migration towards seamless payments.
The future
As financial institutions adopt Case Management, they not only position themselves at the forefront of payment innovation but also improve the management and processing of cross-border payments. By embracing automation, leveraging ISO 20022 standards, and promoting transparency, these institutions enhance their operational efficiency and raise the industry benchmark, contributing significantly to the advancement of cross-border payments.
To learn how much the financial industry can save by transforming its E&I processes, read Swift’s whitepaper, ‘It’s time to transform exceptions and investigations’, available here.
