By
Chimamanda U. Martha
November 23rd, 2023
The banks will be mainly involved in testing and validating the application to evaluate how the technology scales and performs.
SWIFT informs about its collaboration with 22 additional global banks in the development of its blockchain proof of concept (PoC), a part of new standard for cross-border payments called SWIFT global payments innovation (gpi) service. PoC aims to research whether the blockchain can enable banks reconcile their international nostro accounts in real time.
“Collaboration is the cornerstone of innovation,” says Wim Raymaekers, Head of Banking Markets and SWIFT gpi at SWIFT. “This new group of banks allows us to greatly extend the scope of multi-lateral testing of the blockchain application and thus add considerable weight to the findings. We warmly welcome the new banks and look forward to their insights.”
The PoC’s blockchain application is now under development by SWIFT and six founding banks that launched the PoC earlier this year. The new 22 banks will be mainly involved in testing and validating the application to evaluate how the technology scales and performs.
The banks that have recently joined are ABN AMRO Bank, ABSA Bank, BBVA, Banco Santander, China Construction Bank, China Minsheng Banking, Commerzbank, Deutsche Bank, Erste Group Bank, FirstRand Bank, Intesa Sanpaolo, JPMorgan Chase Bank, Lloyds Bank, Mashreq bank, Nedbank, Rabobank, Société Générale, Standard Bank of South Africa, Standard Chartered Bank, Sumitomo Mitsui Banking Corporation, UniCredit and Westpac Banking Corporation.
“ABN AMRO is working on various internal and external Distributed Ledger Technology (DLT) initiatives, of which this proof of concept with SWIFT is one. As a gpi member bank, ABN AMRO is delighted to be participating in the validation and testing of the SWIFT gpi DLT proof of concept as part of the broader SWIFT gpi initiative”, Floor Kurstjens, Director of Operations, ABN AMRO Bank, says. “DLT holds the potential to improve nostro account reconciliation and liquidity management. We welcome the opportunity to work with SWIFT on this proof of concept in order to address today’s challenges and bring the benefits of DLT technology, like lower costs and better risk management, to the SWIFT community and our clients.”
The PoC offers obvious benefits for businesses. If banks are enabled to manage their nostro account liquidity in real time, they will be able to accurately control how much money is required in each account at any given point and will have additional significant funds for other investments.
“China Minsheng Bank is delighted to be participating in DLT with SWIFT. We joined SWIFT gpi aiming to facilitate cross-border payments and improve customer experience. Distributed Ledger Technology provides the opportunity for banks to reconcile international nostro accounts in real time and manage funds throughout the business day. We appreciate the opportunity to be part of Proof of Concept (PoC) initiative and sincerely wish to witness the accomplishments DLT could achieve”, Dr. Xu Jie, PH.D, Deputy General Manager of Transaction Banking Department, China Minsheng Bank, shared.
SWIFT combines the recently released Hyperledger[i] Fabric v1.0 technology and key SWIFT assets in developing the PoC to ensure that the account owner and its correspondent banking partner are the only ones to see all the information related to nostro/vostro accounts. The PoC application will use a private permissioned blockchain in a closed user group environment, with specific user profiles and strong data controls.
Bernard Carless, Head Settlement & SWIFT, FirstRand Bank, shares the excitement of joining the project: “FirstRand Bank is excited to be involved in assisting SWIFT in uncovering DLT’s potential in the Nostro Management space. We welcome any developments associated with achieving real time Nostro and Liquidity Management, and the increased operational efficiencies and improved risk management that accompany them.”
SWIFT is planning to test the PoC blockchain application during the summer months. The results are to be published in September and presented at Sibos in Toronto in October.