The Society for Worldwide Interbank Financial Telecommunication (SWIFT), best known as the middleman that facilitates international bank transfers, has announced a new initiative that will see it explore the possibilities of the Blockchain. The new Global Payments Innovation Initiative is expected to dramatically improve the customer experience in correspondent banking by increasing the speed, transparency and predictability of cross-border payments.
Designed in collaboration with the industry, the initiative will initially focus on a business-to-business payments service supported by participating banks in early 2016.
The new service will help corporates grow their international business, improve supplier relationships, and achieve greater treasury efficiencies. It will enable corporates to receive an enhanced payments service directly from their banks, with the following key features:
- Same day use of funds
- Transparency and predictability of fees
- End-to-end payments tracking
- Transfer of rich payment information.
It will operate on the basis of ‘business rules’ captured in multilateral service level agreements (SLAs) between participating banks. The innovative new service is designed to address end-customer needs, without compromising banks’ abilities to meet their compliance obligations, market, credit and liquidity risk requirements. It will operate on SWIFT’s secure and resilient global platform; and participation will be open to any supervised financial institution that is a member of SWIFT and adheres to its business rules.
Gottfried Leibbrandt, CEO, SWIFT said:
“Correspondent banking serves the industry with millions of secure cross-border payments day in, day out; with this initiative we are building on those strengths, enabling banks to provide distinctive cross-border payments services and providing real benefits to end customers. This is a critical step in cross-border payments innovation.”
Yawar Shah, Chairman, SWIFT said:
“This global payments innovation initiative is a reflection of the strength of the SWIFT community and its ability to collaborate and innovate, and deliver a new benchmark in cross-border payments.”
Delivering a new standard in cross-border payments
Following the pilot focused on cross-border payments for corporates, SWIFT aims to incorporate additional innovations and deploy new technologies as part of the global payments innovation initiative. SWIFT will work together with the industry to define additional service level agreements that will cater for other client groups, further reducing the costs and frictions arising from compliance, liquidity and processing efficiency considerations involved in cross-border payments.
Wim Raymaekers, Head of Banking Markets, SWIFT, adds:
“This initiative is an important first step in driving cross-border payments innovation. As part of the initiative we will continue to develop new and enhanced services, utilising SWIFT’s Innotribe initiative to further engage the FinTech community and explore the application of innovations such as real time payment status tracking, the use of peer-to-peer messaging and blockchain technology.”
The pilot of the new initiative will start from early 2016.
Duncan Riley from Silicon Angle writes:
The move by SWIFT to innovate comes at a time where the traditional transnational payment providers are experiencing a changing landscape as new nibble, cheaper, and quicker startups are entering the space.
Companies such as Ripple, Inc. are rolling out Blockchain powered systems to assist banks in intra-bank transfers with an aim to eventually extend their platform to transfers between different banks, and a range of smaller startups including companies such as Coins.ph and Alliance Commerce, to name but a few, are utilizing Bitcoin itself to deliver person to person (P2P) payment and remittance services that bypass traditional financial service providers.
There is no guarantee that SWIFT will actually end up adopting the Blockchain itself, but the fact that they are looking at it as part of their future roadmap is not only a sign of the times, but further recognition of the positive benefits use of a distributed digital ledger can provide.