Swift uses super ledger fabric technology to save 30% cross-border payment costs

Swift, the global Security financial Information service provider, has formally chosen to use the Super Ledger fabric database in its most prominent blockchain project.

The project was designed to streamline bank reconciliations to facilitate international transactions, including BNP, New York Mellon and Wells Fargo, and three other global financial institutions.

As one of the founding members of the Linux Foundation's Super Ledger project, Swift's decision to experiment based on this technology may not be surprising, and Swift also praises the functionality of the blockchain, including user-defined data access and other privileges.

If this blockchain proof-of-concept (PoC) is successful, the SWIFT Global Payments Innovation Initiative (GPI) executive, Wim Raymaekers, says this can save up to 30% of the costs associated with cross-border payments.

Raymaekers told CoinDesk that:

"We really want to see if blockchain technology enables banks to get better visibility of information, optimize bank liquidity, and reduce reconciliation costs." ”

Other banks involved in the POC include the Australian and New Zealand Banking Group (ANZ), the Singapore Development Bank (DBS) and Royal Bank of Canada, which are working with Swift's GPI.

In the testing phase of this implementation, the other 20 institutions will also join these bank partners.

It is worth noting that the trial will also attempt to take advantage of the existing standards used by SWIFT members. Data stored on the blockchain, as well as APIs for querying and updating data, will follow Swift's ISO 20022 information format

If the test succeeds, the blockchain POC can be incorporated into Swift's GPI solution.

Raymaekers says:

"Even though we have a current-account data exchange solution, we want to see if distributed ledger technology is better." ”

Blockchain Current Account

To facilitate international transactions, banks usually store money around the world, known as current accounts. However, depending on the complexity of the transaction, it may take several weeks for these international transactions to complete the settlement.

Although current accounts are designed to save time by moving funds to where they need to be before they are needed, the funds are dormant and receive a small amount of interest when not in use, rather than being used in a more positive way.

According to Raymaekers, Swift has divided the experiment into two parts in order to test whether distributed ledger technology minimizes reliance on banks.

First, the technology itself. Swift's fabric concept validation is creating existing GPI resources that leverage the bank's information platform. The GPI, which was launched in February with 12 members, now has 30 banks involved in the GPI implementation phase and more banks are expected to participate.

By using more traditional technologies in the GPI Toolkit, Swift has improved service speed and transparency, and now they want to see if blockchain technology can do better, Raymaekers said.

He said the GPI has sent hundreds of thousands of messages since its launch.

The second part of this proof of concept focuses on the business. At the top of the blockchain implementation itself, swift developers plan to create and run a smart contract that helps automate the transfer process.

Raymaekers says:

"We are using distributed ledger technology to exchange debits and lenders. ”

"We are creating value added through smart contract applications that will present status information to banks in real time." ”

Disruptive Force

But while the test is underway, Swift is also in the midst of a swirling debate.

Swift, a financial information provider, has also been identified as one of the most likely intermediaries for blockchain technology, because of the previous heated discussions around blockchain technology and its possibilities.

Along with DTCC and other companies, supporters of the existing traditional financial infrastructure have become the targets of startups that leverage distributed ledger efficiency.

However, Swift has opened its own attitude this year and is willing to try to integrate blockchain technology with its own business model.

However, some sceptics insisted that Swift was willing to open its market position and adopt a new model, Raymaekers asserted that Swift's acceptance of the change was not confined to the project.

He said:

"There may be a whole new way to save money without having to use a proxy bank account. But this is a comprehensive reflection on the proxy banking model. ”