SWIFT looking at the Bitcoin Blockchain as part of new global money transfer initiative
The Society for Worldwide Interbank Financial Telecommunication (SWIFT), best known as the body that facilitates international bank transfers, is riding with the times with a new initiative that will see it explore the possibilities of the Blockchain, the distributed digital ledger that powered Bitcoin.
The move, called the Global Payments Innovation Initiative (GPI) will see the organization aim to dramatically improve the customer experience in correspondent banking by increasing the speed, transparency and predictability of cross-border payments.
GPI will initially focus on a business-to-business payments service supported by participating banks in early 2016 with a goal to help corporates grow their international business, improve supplier relationships, and achieve greater treasury efficiencies.
SWIFT promises that it will enable corporates to receive an enhanced payments service directly from their banks, including same day use of funds, transparency and predictability of fees, end-to-end payments tracking, and the transfer of rich payment information.
“This initiative is an important first step in driving cross-border payments innovation,” SWIFT’s Global Head of Banking Markets Wim Raymaekers said in a statement. “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”
While the organization is exploring the use of the Blockchain, it won’t happen overnight, with Raymaekers adding “you can improve [the existing system] over time when needed. That’s the strategic roadmap. But you cannot just unplug it and put something else in there just like that. That’s not realistic. Banks have built that into their systems for compliance, you have to maintain that level of control,” Raymaekers said.
Raymaekers noted further that the Blockchain might be applicable in more complex use cases like securities, especially when it comes to slashing transaction time, or even reducing the required term to null.
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.
Image credit: au_unistphotostream/Flickr/CC by 2.0
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