Swift goes deeper into the blockchain
12 January 2017 | 18597 views | 0
Interbank payments network Swift is stepping up its exploration of the blockchain, launching a new proof of concept test to determine if distributed ledger technology could help banks reconcile their nostro databases in real time.
Swift's latest research effort forms part of its global payments innovation (gpi) initiative, which is seeking to develop improved standards for correspondent banking.
Under the current correspondent banking model, banks need to monitor the funds in their overseas accounts via debit and credit updates and end-of-day statements. The maintenance and operational work involved represents a significant portion of the cost of making cross-border payments.
The new PoC will test whether distributed ledgers may be able to help banks reconcile those nostro accounts more efficiently and in real time, lowering costs and operational risk.
Swift's venture into the world of distributed ledger technology and smart contracts was exclusively revealed by Finextra in November last year, when the corbanking co-operative took the wraps off its first PoC which tackles the issue of asset servicing across the full lifecycle of a bond trade, from issuance to payment of coupons and maturity.
At the time, Swift said it wanted to become more vocal and engaged with the community in driving the application of the technology at both an industry level and embedded within its own member-owned network, outlining plans to work with vendors and member banks to deliver a blueprint for a Swift-run distributed ledger and the development of a DLT sandbox.
The new PoC was scoped in collaboration with leading correspondent banks and Swift is inviting gpi member banks to participate in the trials in early 2017.
“Whilst existing DLTs are not currently mature enough for cross-border payments, this technology, bolstered by some additional features from Swift, may be interesting for the associated account reconciliation,” says Wim Raymaekers, head of banking market and Swift GPI. “This PoC gives us the opportunity to test DLT and determine if it can be applied to this particular use case.”
He says the co-operative will deploy open-source Hyperledger technology, and combine it with key Swift assets to bring it in line with the financial industry’s requirements.
Reflecting its increasing interest in distributed ledger technology, Swift has just posted a job ad for a DLT product manager to join its R&D team in the US. The ad specs out some of Swift's ambition for advancement in the space:
We are looking for an enthusiastic and dynamic professional with an innovative mind-set able to drive block chain and R&D activities with a vision to enhance SWIFT platform to offer DLT based services to our community when the technology will mature and when firm business use cases will emerge.
• Drive Product Management activities for DLT to elaborate a future SWIFT DLT platform
o Define Customer requirements for integration of DLT technology within SWIFT platform and portfolio.
o Articulate SWIFT value proposition for a SWIFT DLT platform
o Work together with the IT team on the design of a SWIFT DLT platform, assessing what are the changes required on the central platform and on the customer footprint to integrate DLT based services in SWIFT existing portfolio
o Validate requirements and solution with our customers and with potential partners.
o Work on defining the business model for a DLT based solution for SWIFT in collaboration with the marketing green teams and the pricing team.
o Explore potential partnerships with DLT vendors, assessing how partner solutions can complement SWIFT offering and be a business accelerator for SWIFT strategy on DLT
• Support and drive exploration of DLT for various business use cases, by engaging with our customers on DLT Proof-of-concepts, leveraging the SWIFT DLT sandbox, in close coordination with the Marketing and IT teams.
• Engage with the fin-tech and start up eco-system on DLT through the Innotribe industry challenges and initiatives such as Eggsplore DLT programme to assess whether their technology could be leveraged by SWIFT or by our customers.
• Support the 3 regions, (Americas & UKI, EMEA, APAC) in their customer engagement on DLT through participation to internal and external meetings, participation to business forums, production of collateral, sharing of market intelligence, etc.
• Promote SWIFT work on DLT and position SWIFT as a thought leader in innovation on DLT by writing and collaborating on white papers, participating to conferences and industry groups, etc.
• Keep abreast with the technical and business trends in the financial and technology industry around DLT, build market and competitive intelligence and share information with others.
• Build and maintain strong relationship with internal stakeholders (Product and Market managers, Sales, Standards, IT Architecture and Delivery team(s)) to accomplish business objectives
• Support team mission by promoting and driving innovation inside and outside SWIFT.