Will the blockchain replace SWIFT? No fringe concept, the question has long been openly asked by innovators in the blockchain industry as well as FinTech professionals due to the potential of the technology to replace financial intermediaries.
As the "global backbone of the financial industry", this is notably one of the core functions that SWIFT today serves.
Accordingly, the question of how SWIFT would respond to this potential threat gained new definition this week with the news that the financial messaging services provider is working to build its own distributed ledger platform. While it’s no secret that SWIFT had been exploring the tech , such conversations had previously been highlighted mostly as part of its events, research and its affiliation with the open-source, Linux Foundation-led, Hyperledger project .
Details as to what this could look like were scarce, but SWIFT did suggest its proofs-of-concept currently are exploring how it would integrate distributed ledgers in its SWIFTnet PKI security layer and assess interoperability with its existing electronic data standards, among other use cases.
Still, SWIFT ultimately made clear that it does not believe distributed ledgers are “mature enough to fulfill the requirements of the financial community”, statements that come even as a growing number of the 11,000 financial institutions it offers services explore this question.
Advances in using distributed ledgers for financial messaging are already gaining ground, with tech-friendly payments services providers, including CGI Group, Earthport and IntellectEU, all offering products based on Ripple’s technology.
Amidst this backdrop, the news seems to have sparked a diversity of reactions.
There were positive signs from existing partners that saw the move as a step in the right direction, while more progressive minds like Barclays’ Simon Taylor called it a “‘me too’ moment two years late”.Still, Spencer Bogart, equity research associate at Needham and Company, perhaps best summed up the […]
