SWIFT is the latest FinTech player to perk up at the thought of using distributed ledger technology for business transactions.
In an announcement on Thursday (Sept. 22), SWIFT released a new paper exploring the use of distributed ledger technologies, like blockchain, and their potential implications for smart contracts, a more enforceable and secure contract that could have significant implications for corporate trade and other business processes.
"The promise of DLT [distributed ledger technology] is the synchronization of financial data between multiple organizations, whilst smart contracts can further provide self-executing efficiencies on the ledger," explained SWIFT Head of Standards Stephen Lindsay in a statement.
While SWIFT acknowledged the potential for distributed ledgers and smart contracts to streamline and secure business transactions, the company did note that there is a potential for implementation of this technology to overcomplicate the space.
"This paper … highlights the importance of avoiding 'reinventing the wheel' when it comes to business definitions that facilitate interoperability," Lindsay continued, adding that, as noted in the paper, it's so far too early for full-scale standardization of using distributed ledgers for smart contract transmission.
"However, SWIFT stands ready to work with the community to conduct further studies into the reuse of existing business standards in order to better facilitate the efficient workings of DLT/SC [smart contract] technologies for the financial industry as a whole," the executive concluded.
SWIFT's report explored how the market would approach standardization of these technologies and how to apply previous standardization initiatives to this process. According to the company, collaboration between market players is paramount to developing standards for these technologies for potential real-world adoption — that means streamlined business processes and legal implications of using smart contracts sent via distributed ledger, it noted.