SWIFT announces it intends to use blockchain in future

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Daniel Webber
Daniel Webber
Founder & CEO
Daniel is Founder and CEO of FXcompared and has 18 years of experience in the international finance world focusing on cross-border payments, technology and the property sectors. Daniel is widely… Read more

•       SWIFT set to expand use of Global Payments Innovation, or GPI, in order to advance blockchain goals

•       Platform is aiming for a 24/7 blockchain solution

•       “Cooperation by all players in the community is important, because the openness and universality of the envisioned system are unique,” says report

 

Financial messaging service SWIFT has followed in the footsteps of other major providers in the online money transfer space by announcing that it will seek to implement a blockchain-based solution.

In a paper entitled “Payments: Looking into the future”, the organisation confirmed that it is currently seeking  proof of concept for a blockchain product – and that it hopes to shift to using it as much as possible.

SWIFT said that it had created a plan called GPI, or Global Payments Innovation, to structure its response to the blockchain trend.

As part of this plan, it hopes to implement instantaneous remittance services which can move cash from one place to another around the world – on a 24 hours a day, 7 days a week basis.

The report, which was authored by SWIFT’s CEO Gottfried Leibbrant and its Chief Marketing Officer Luc Meurant, argued that the new system was suitable only for a world in which financial systems were increasingly open.

“Importantly, we don’t think that cross-border payments challenges should be solved for with closed loop systems”, it argues.

"Doing so would easily solve for a subset – or multiple subsets – of participants, but value needs to move everywhere – from every account, to every account. Loops create barriers and friction; they reduce fungibility and portability, they limit competition and they fragment liquidity.”

The report emphasised the way in which its new payments system would be able to accelerate the speeds with which many banks would be able to add value for customers.

“Cooperation by all players in the community is important, because the openness and universality of the envisioned system are unique; the more widely adopted the convention for moving value, the easier the circulation of value – and the more the convention will be used”, it claims.

“Banks are key in this. Those that can move faster, will be able to move faster; subsets of participants may want to forge ahead with projects and will be enabled to do so, but everyone will have to progress in payments.”

The international dimension, meanwhile, is cited by the report as one of blockchain’s key strengths.

“Revolutionising both incrementally and radically we will enable the movement of value ‘from any account to any account, anywhere in the world’ with the same immediacy and convenience as domestic payments”, it concludes.

GPI is already in force for a slim majority of the global cash transfers instituted by SWIFT. Over 55% of such payments are made under the GPI system.

Despite the significance of SWIFT’s announcement, however, it has remained overshadowed by the other recent blockchain-related payments announcement.

Media coverage of SWIFT’s news was contextualised by references to Libra, the proposed cryptocurrency offered by Facebook announced last week.

Libra, which is also backed by payments corporation Visa and venture capitalist firm Andreessen Horowitz, will also use blockchain to enable speedier payments around the world.

From SWIFT’s GPI to Facebook’s Libra and many others, there are all kinds of exciting developments going on in the payment services sector at the moment. Keep up to date with them over at our magazine.


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