SWIFT to trial blockchain – not for core payments service • The Register
The Society for Worldwide Interbank Financial Telecommunication (SWIFT) has announced that it will try to connect its 11,000 members to a blockchain – but not for the payment service.
The register Most recently, SWIFT was affected when it reported that it had withdrawn its services from Russian entities – an action that highlighted the association’s important role in facilitating international money movements. So does the fact that China sees international acceptance of its digital currency as giving it the chance to create an alternative to SWIFT and challenge its dominance.
TL;DR: SWIFT is important, and its huge membership makes it influential.
And now it wants its members to adopt a blockchain.
“When an event takes place in a listed company – dividend payments, exchange offers, mergers, Dutch auctions or other corporate actions – the information must be quickly shared with investors, creditors and all other key stakeholders,” opens a statement from SWIFT on Wednesday.
The statement adds that institutions have attempted to automate their handling of such messages, but remain “heavily dependent on manual processes that create both additional costs and risks for market participants”.
That’s because the global financial system has many participants, and many have their own data standards that other players must analyze before ingesting or processing information.
SWIFT’s director of strategy Jonathan Ehrenfeld estimated that manual processing of data therefore accounts for around 30 percent of the costs associated with processing business transactions.
The community thinks blockchain can blow it away, so is piloting one using technology from an organization called Symbiont, and its platform called Assembly.
“By bringing Symbiont’s assembly and smart contracts together with SWIFT’s extensive network, we are able to automatically harmonize data from multiple sources into a corporate action event,” said SWIFT Chief Innovation Officer Tom Zschach. “This can lead to significant efficiency gains. Business transaction data from SWIFT messages is processed by SWIFT Translator and uploaded to Symbiont’s blockchain. The smart contract technology can then compare information shared between participants and flag discrepancies, contradictions or inconsistencies across custodians.”
“If the solution proves successful, intermediaries will need to field fewer queries from clients about corporate action data. It also means that global managers and asset managers can reduce the number of people who spend their time manually scrubbing corporate action data,” added Zschach.
SWIFT is already developing apps based on Assembly “with a pilot group of participants set to test it and provide feedback in September.”
The community says feedback on this effort will determine whether it takes the idea forward.
Many financial institutions are already blockchain-curious, or more advanced in their consideration or use of the technology. If SWIFT decides that blockchain has a role in its world, 11,000 of the world’s financial institutions and related players could run one – a significant boost for the technology and a big step away from its association with the sweet side of cryptocurrency and Web3. ®
