Financial messaging firm SWIFT made its first public embrace of blockchain technology last year with a whitepaper exploring the use of the technology for smart contracts. Now, it seems the company is taking the next step in adopting blockchain for real-world uses.
An announcement Thursday (Jan. 12) said SWIFT will launch a proof-of-concept test to explore the use of blockchain technology for cross-border payments and settlements by banks. Described as a “research effort,” the move is part of its overall global payments innovation (GPI) initiative, SWIFT noted, which explores innovative technologies to streamline and accelerate interbank payments used to move money across borders.
Currently, banks using the interbanking method can only monitor the progress of a transaction by accessing their overseas accounts via end-of-day statements and credit and debit reports. Now, SWIFT is looking at how distributed ledger technology could help banks settle their international accounts in real time.
It’s no certainty, however, that a working application using blockchain for cross-border payments will emerge, SWIFT said.
“Whilst existing DLTs [distributed ledger technologies] are not currently mature enough for cross-border payments, this technology, bolstered by some additional features from SWIFT, may be interesting for the associated account reconciliation,” explained Wim Raymaekers, head of banking market and SWIFT GPI. “This PoC gives us the opportunity to test DLT and determine it if can be applied to this particular use case.”
The initiative will launch an open-source Hyperledger technology, the company said, that uses SWIFT technologies to ensure any solutions developed comply with industry best practices.
SWIFT has struggled in recent months with a slew of cyberattacks, with one of the most high-profile attacks targeting the Bangladesh central bank, which uses the SWIFT payments messaging system. Hackers reportedly infiltrated SWIFT’s system to hide fraudulent transfer requests.