Interview with Andrew Smith, CTO at RTGS Global

RTGS Global is the world’s first cross-border real-time liquidity network. What that means is through our 24/7/365 network we’re able to authenticate and audit interbank real-time liquidity on a transaction by transaction basis. Through our network, we’re able to deal with multi-currency payment instructions delivering instant transactional integrity, security, risk reduction and settlement finality. We collaborated with Microsoft to develop this transformative new system built on Microsoft Azure.

Earlier this year we launched stage one of this network which will safeguard existing commercial banking relationships but will change the way they work. A lot of processes today involved in cross-border transactions remain time and labour intensive. The network improves efficiency, reduces costs and enables a new level of customer service.


How did RTGS Global come about?

The adoption of Real Time Gross Settlement systems for single-currency transactions has transformed domestic payments in many countries. However, the seemingly straightforward process of sending money from one account to another still presents challenges when it comes to cross-border transactions with multiple currencies.

Put simply, this is because cross-border transactions require greater liquidity transparency in order to complete. Often, a physical supply chain will still deliver before a financial supply chain will. The ramifications of this slow and cumbersome process are felt by people and businesses the world over. In fact, inefficiency and slow transaction speeds result in unnecessary costs amounting to $85,617 every second.

RTGS Global recognised this and decided the global financial services industry required new, technology-driven solutions that make interbank liquidity auditable and visible. In doing so every financial transaction can be made based on fact. The network has been specifically designed to deliver the global solution to liquidity visibility.


How has the need for cross-border payments evolved during the pandemic?

The need for liquidity visibility has become even more crucial as we enter times of economic uncertainty as it’s fundamental to mitigating risk. Additionally, earlier this year, the G20, under the 2020 Saudi Arabian Presidency, made the decision to make cross-border payments a priority.

For this to become a reality collaboration between all relevant bodies within the industry will be required. We need to outline the current challenges and seek solutions. In response to the G20, the Financial Stability Board (FSB) and CPMI, have outlined the seven major sources of friction: funding costs, weak competition, fragmented data formats, complex processing of compliance checks, limited operating hours, legacy technology platforms, and long transactions chains.

In a time of global uncertainty triggered by the economic downturn, this highlights the importance of the work that RTGS Global is working on. Moreover, it highlights how payment systems for cross-border transactions globally must be as efficient and frictionless as possible. This will require an industry-wide approach and focus. This is the only way to help mitigate the negative consequences for end consumers, which include high cost, low speed, poor access and limited transparency.

What can we hope to see from RTGS Global in the future?

Expect to see RTGS Global providing the infrastructure that enables banks to revolutionise the cross-border real-time liquidity landscape in the near future. I can’t give too much away but at the moment RTGS Global is working with a number of select banks across the world – from America to Australia – to test the system, adding more organisations iteratively, as the process continues. The network will then become available to 43,300 banks. We’ve also been asked by central banks if the system could handle treasury-bills as well. Truth is it probably could but we’re focusing on cross-border liquidity first.