SWIFT’s new Blockchain pilot project aims to increase efficiency around corporate events

Leading secure financial messaging system SWIFT is testing blockchain in a pilot project with fintech company Symbiont Inc.

In the past, SWIFT has explored ways to enter the central bank’s digital currency space.

SWIFT’s Blockchain Experiment

The collaboration aims to drive efficiency in the transfer of data related to corporate events such as dividend payments and mergers, said a Bloomberg report, which adds that Citigroup, Vanguard and Northern Trust will also participate in the project.

“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 Tom Zschach, Chief Innovation Officer at SWIFT.

The experiment will focus on data tracking and transparency to identify anomalies, the coverage says.

The Society for Worldwide Interbank Financial Telecommunication (SWIFT) is headquartered in Belgium and is a leading provider of secure financial messaging systems. It is a member-owned cooperative that facilitates money transfers between banks both domestically and globally.

SWIFT connects over 11,000 banking and securities organisations, market infrastructures and corporate clients in over 200 countries and territories.

Follows digital assets closely

In May, SWIFT reported that it is working with French information technology services and consultancy Capgemini on CBDC interoperability. The goal of the experiment is to leverage digital currency for “frictionless” cross-border transactions. Through this pilot project, SWIFT aimed to address three use cases – CBDC to CBDC, fiat to CBDC and CBDC to fiat.

The financial messaging system is also looking at interoperability between other digital agencies and currencies.

In December, SWIFT announced plans to enter the asset tokenization market, which is expected to grow over $24 trillion by 2027, according to the estimate. As tokenization of illiquid assets such as stocks, bonds, commodities and real estate becomes increasingly popular, banks and investment firms are responding to the latest trend. SWIFT aims to leverage fractionalization to improve liquidity and availability.

“SWIFT plans a series of experiments in Q1 2022 leveraging its trusted role as a central platform to explore the issuance, delivery versus payment (DVP) and redemption processes to support a frictionless and seamless tokenized asset market,” it said in a statement report.

Fight for faster and cheaper bank transfers

The battle for better, faster and cheaper bank transfers has intensified, with some blockchain firms aggressively chipping away at the dominance of SWIFT, which has processed 7.633 billion financial messages so far this year and looks set to cross the 10 billion mark.

However, with increasing interest in cryptocurrencies, CBDCs and stablecoins, some analysts believe that SWIFT’s relevance may decline in the near future. Ripple Labs CEO Ripple Brad Garlinghouse announced in early 2019 that XRP is closing the gap with SWIFT in this area.

“What Ripple is doing every day is taking over Swift. Currently, we have registered over 100 fast-enabled banks that are now using the Ripple technology. The technology used by banks today that Swift developed years ago has not evolved or kept pace with the current market, Garlinghouse said.