SWIFT rejects blockchain
SWIFT - Blockchain
The otherness between the solutions in the framework of GPI - Global Payments Innovation, developed by SWIFT and fintech start-ups that demonstrate PoC (proof of concept), is the experimental projects of banks that are testing new approaches of SWIFT, based on already operating systems.
SWIFT continues elaborations, focusing on the launch of the production version of the system at the beginning of next year (less than 6 months after the announcement of the pilot project at SIBOS conference in September 2016). Creators of the project argue it "will significantly refine the conduct of correspondent payings, increase the rapidity, the transparence, it will enable the continuous tracking of cross-border payings".
For a sender to transfer money to other countries, especially if it needs a transfer from one currency to another, a procedure may last for more than 3 days, and during this period the paying literally disappears into a "black pit", before the money will appear in an account of a recipient.
SWIFT, especially its department Innotribe, has included the research of blockchain in GPI roadmap for the next year.
Speaking about current issues, Wim Raymaekers, manager of the banking markets division, explains the inequality between GPI and pilot projects based on blockchain.
GPI is radically diverse from proof of concept. When they say: "we hold paying from Bank A to Bank B for 3.5 seconds", it is usually just a demo; behind it, there is no standard banking infrastructure.
We practice the opposite approach. Banks embed GPI technology into their existing systems; they automate via GPI its protocols. This is the meaning of our experimental project.
Some banks carry out so-called "penny tests." They send and receive micropayments from bank A to bank B and back again, utilizing a working infrastructure. Some banks have already carried out corporate payings via GPI.
The payment tracking "from door to door" - one of the main features of GPI; the tracker mechanism is a cloud-based database; SWIFT provides its secure hosting. The key words here - "protected", it makes a good impression on the bank staff responsible for data security. Privacy of data is the most vulnerable spot of blockchain applications in financial apps of banks. Despite all the signs the reliability of distributed registries, banks tremble that they have to "let go" data, placing on blockchain.
SWIFT provides a hosting of the tracker. The access to it will be carried out with the help of protected API, which means a customer will be able to retrace his deal from the start to the finish.
Raymaekers reminded SWIFT manages assets through its own management platform and identity systems.
You can argue about the decision on the basis of blockchain demonstrating proof of concept on the example of the liquidity of nostro / loro accounts, but what kind of data are you showing in your reports? SWIFT is an owner of the unique experience of remittance standardization and the set of rules, because the data model is extremely important.
Distributed registry - it's just a data broadcasting technology, but before that we need to agree on what to spread and its format.
As regards the acceleration of the operation, the commune of international banks have accepted to a new set of business rules to cross-border payings and applying SWIFT' s existing infrastructure during payments - in one day. Raymaekers indicated corporations do not always require cross-border payings in real time; they are more concerned about the high rate of reliability.
Any payment is carried out without a duly executed assignment. The conditions indicate when the paying should be held. These conditions are usually set between 30 and 60 days so that payments can be included in a schedule. Of course, there are immediate deals, but most payments are planned in advance.
Regarding R3 consortium
Raymaekers said upon the news that a number of big banks decided not to restore their membership in R3:
Proof of concept may be promising, but proof of readiness outweighs here.
GPI pilot project has worked out; there are banks that work with it. Here you can say: "Yes, it was amusing", then return to current affairs.
As for Ripple
Ripple, a blockchain-start in the field of cross-border payings has declared its readiness to collaborate with SWIFT; blockchain technology would be responsible for payings and SWIFT would utilize for messaging. Can it be useful?
"They did offer a cooperation", - said Raymaekers. "With Ripple payments between banks can actually be carried out. But the exchange of personal data should be kept as confidential and it should provide SWIFT ».
Why do not you work with Ripple? Raymaekers said: "We sent requests to the banks to find out their opinion on the matter. They have not expressed interest".
The common position of the large financial institutions is a tough defense of their market share. Bloomberg formulated such position as:
Bitcoin was created as an alternative to the banks, and not as a solution for them.