24 Jun 2019 Anthony Lehrman
SWIFT Enters The Blockchain Space With An Open Ecosystem Proposal
SWIFT, the organization that introduced and standardized IBAN and BIC in modern-day banking, is currently working on adoption of the blockchain technology. SWIFT did a successful Proof-of-Concept (PoC) on R3’s trading platform, allowing a more open mechanism for cross-border payments and interaction with banks.
At the moment, the banking sector is lagging in terms of relying on technological advancements and innovations, unlike the Fintech sector, where the DLT and blockchain have been adopted with ease.
SWIFT’s answer to the slow and cumbersome traditional banking is GPI – “Global Payments Innovation.” The GPI contains three key elements – a unique tag for transaction tracing from it’s beginning to its end-customer, real-time monitoring transaction monitoring service, and a new convention for banks and cross-border payment companies to make transactions in a tight timeframe.
SWIFT announced that over 55-percent of the international payments are already made under the GPI. The enhanced speed rates at which transactions are made eliminates exhaustive settlement processes as all GPI transactions reach their end beneficiary in less than 24 hours.
Transitioning to open ecosystem for banks and major institutional players is critical. SWIFT’s suggestion is to shift towards ISO 20022, which will enable small businesses to reach newer international markets, as payments would become instant and 24/7.
“It’s do or die, especially when we talk about cross-border payments. The world is changing and sending value under different forms, and expectations are this to be done fast, secure, and simple. Only an open, blockchain-based ecosystem is capable of delivering the answer to such needs”, SWIFT’s CEO Gottfried Leibbrant stated in a document, describing the transition to newer payment mechanisms.
SWIFT is best known for revolutionizing the world of traditional banking with the introduction of BIC – a code that specifies the exact bank, and the IBAN – the precise location of a given bank account.
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