Can Swift stay relevant in a world of blockchain?
Swift, founded in 1973 with the aim of standardizing how cross-border payments are sent, is the epitome of a middleman. It sits between many of the banks worldwide, making money off the fees it charges when its members sent transactions between one another.
Since its founding, the number of Swift member banks has grown from 239 to more than 11k. Last year, the “cooperative society” sent 6.1bn financial messages on behalf of its members, earning €710m in operating revenue.
Then came the blockchain, and in many ways, all that money is up for grabs.
By providing a shared platform for exchanging transactions in real-time, the technology has led some industry middlemen to reevaluate their roles. With a blockchain, the potential exists for all of Swift’s members to someday send each other money instantly, instead of several days it can currently take.
Swift isn’t planning to go down without a fight, according to those on the front lines working to help ensure the payment network remains relevant. Yet that doesn’t mean it’s unwilling to change.
The organization is spearheading a new payments initiative, led by some of the world’s largest banks, that approximates the functionality of blockchain. Swift has also pursued a broad collaborative effort alongside startups, looking to adapt to both the technological and cultural winds of change that are shaping finance today.
A new foundation
At the heart of this effort is a plan to reinvent how Swift functions at its core.
Released as a pilot last month, the Global Payments Initiative is aimed at boosting transparency and speeding up the time in which it takes to complete a transaction.
In September, Swift CEO Gottfried Leibbrandt told an audience of 8,000 people at Sibos that his company was looking at blockchain as a way to further enhance the GPI.
One of the ten global banking executives leading Swift’s GPI Vision Group, which is tasked with laying out the long-term goals of the platform, says that his team is working to anticipate the potentially disruptive — and beneficial — forces of blockchain.
BNY Mellon Treasury Services head of global product management Tony Brady told CoinDesk:
“While we’re addressing the problems with cross-border payments with the technologies that are already available, that we already know are scalable, secure…. We want to start to evaluate whether emerging technology helps us in some way.”
According to Swift, the GPI is being designed to reduce transaction completion times from as long as five days to a single day or less. Potential areas of improvement include an even more transparent fee structure and, in some cases, near-instantaneous settlement times. More than 80 global banks are set to use the new platform when it goes live next year.
Yet working with the existing leaders in the financial industry will only go so far – especially when the competition itself is increasingly coming from the startup space.
Article Source: http://www.coindesk.com