SWIFT tests shows blockchain has potential for global liquidity optimisation

SWIFT tests shows
blockchain has potential for global liquidity optimisation

…………………………………………………………………………….

Singapore and Hong Kong, 13 October 2017
– SWIFT
has published an interim report on the proof of concept (PoC) for real-time
Nostro reconciliation using a SWIFT-developed distributed ledger technology
(DLT) sandbox with 33 global
transaction banks, as part of its SWIFT gpi service.

The PoC is testing
whether DLT can help banks reconcile Nostro
accounts more efficiently and in real-time, while lowering costs and
operational risk. The report provides an overview of the PoC to date,
including technical objectives, early findings on the potential business
benefits, as well as key challenges that still need to be addressed to achieve
industry-wide adoption.

Under the current correspondent banking model, banks
need to monitor the funds in their overseas accounts via debit and credit
updates and end-of-day statements. The maintenance and
operational work involved represents a significant portion of the cost of making
cross-border payments.

Preliminary results of the PoC show that the
SWIFT-developed DLT application can deliver the business functionalities and
data richness required to support real-time liquidity monitoring and
reconciliation.  DLT provides real-time visibility to both the account
owner and its servicer on the available and forecasted liquidity on the Nostro
account and supports payment reconciliation and investigations by providing an
enriched data model based on ISO 20022.

“The DLT PoC supports SWIFT’s goal of making
cross-border payments more efficient – a mission we have championed through
SWIFT gpi, which offers customers fast, transparent and traceable cross-border
payments,” says Wim Raymaekers, Head of Banking Market and SWIFT gpi at SWIFT.

SWIFT’s DLT sandbox also demonstrated progress in DLT
technology and helped identify issues that still need to be addressed to
achieve industry-wide adoption. Specific challenges include the need to develop
unique value propositions in response to the different levels of
sophistication, automation and past investments of banks. In addition, it is
crucial that integration with legacy back office applications and co-existence
with existing processes is taken into account.

“Preliminary results
from the DLT PoC are positive for this use case,” adds Damien Vanderveken Head
of Research and Development, SWIFTLab and User Experience at SWIFT. Significant
progress has been made, but it is still early days for the latest generation of
Blockchain technology, and it will take time before it is mature and scalable
enough for mission critical applications.”

SWIFT’s DLT PoC
started in April 2017 and will conclude in November 2017,
with the final results available in December.

For
more information about SWIFT gpi, please click here.

SWIFT
developed, as part of SWIFT’s gpi strategic roadmap, together with 33 leading
banks around the world, a proof of concept where a distributed ledger is used
to provide real-time visibility on Nostro accounts.  This initiative
started in January 2017 and is due to end towards the end of the year.

This
interim report shares information on the proof of concept, its business and
technical objectives, the DLT solution developed by SWIFT through a
collaborative approach and the testing strategy. It also provides a summary of
conclusions both at business and technology levels from the testing conducted
so far by the 6 banks forming the founding group.

The validation group with
27 participating banks have just started their work to further test the application
and the data model. This report will be updated following completion of their
testing with the consolidated feedback from the two groups and to draw the
final conclusions.

About SWIFT
SWIFT is a global member owned cooperative and the world’s leading provider of
secure financial messaging services. We provide our community with a platform
for messaging and standards for communicating, and we offer products and
services to facilitate access and integration, identification, analysis and
regulatory compliance.

Our
messaging platform, products and services connect more than 11,000 banking and
securities organisations, market infrastructures and corporate customers in
more than 200 countries and territories. While SWIFT does not hold funds or
manage accounts on behalf of customers, we enable our global community of users
to communicate securely, exchanging standardised financial messages in a
reliable way, thereby supporting global and local financial flows, as well as
trade and commerce all around the world.

As
their trusted provider, we relentlessly pursue operational excellence; we
support our community in addressing cyber threats; and we continually seek ways
to lower costs, reduce risks and eliminate operational inefficiencies. Our
products and services support our community’s access and integration, business
intelligence, reference data and financial crime compliance needs. SWIFT also
brings the financial community together – at global, regional and local levels
– to shape market practice, define standards and debate issues of mutual
interest or concern.

Headquartered
in Belgium, SWIFT’s international governance and oversight reinforces the
neutral, global character of its cooperative structure. SWIFT’s global office
network ensures an active presence in all the major financial centres.