The Society for Worldwide Interbank Financial Telecommunications has launched a new initiative that is aimed at improving remittance payments with the application of the blockchain technology.
The Society for Worldwide Interbank Financial Telecommunication (SWIFT) has informed it is going to explore blockchain under the initiative named the Global Payments Innovation (GPI) Initiative. The project is targeted at leveraging the benefits of the bitcoin technology to enhance cross-border payments.
SWIFT is a Belgium-based organization that was founded in 1973 to facilitate bank transfers across different countries. The company delivers its services to more than 10,800 banking companies, corporate clients and stock organizations. It allows users to securely exchange automated financial information at reduced operational risk and lower price.
With the new initiative, SWIFT plans to accelerate the process of making international payments and make it more transparent.
At first, the initiative will concentrate on business-to-business payments backed by participating banks. Planned to start in the beginning of 2016, GPI will help corporates to enhance supplier relationships and expand their international business.
“This initiative is an important first step in driving cross-border payments innovation. As part of the initiative, we will continue to develop new and enhanced services, utilising SWIFT’s Innotribe initiative to further engage the FinTech community and explore the application of innovations such as real-time payment status tracking, the use of peer-to-peer messaging and blockchain technology,” said Wim Raymaekers, Director of Banking Markets at SWIFT.
Raymaekers added that the integration of the technology will take some time. “That’s the strategic roadmap. But you cannot just unplug it and put something else in there just like that. That’s not realistic. Banks have built that into their systems for compliance, you have to maintain that level of control,” he said.
There is now a large number of new startups entering the international payments market. Blockchain company Ripple aims at facilitating correspondent banking by providing a blockchain-based platform to move money across ledgers.
“You still need business rules on top of that and you still need the payment information anyway. That’s not in a distributed ledger technology, at least not today,” Raymaekers commented on Ripple.
Alliance Commerce is also using the blockchain to offer remittance services eliminating the need to interact with traditional financial service providers.
The use of the blockchain system can automate KYC/AML checking. “I think the answer is that each blockchain address would be tagged with its country, at the time that it’s given permission to transact. Then different logic would be applied by the blockchain for transactions between countries, with perhaps an extra piece of approval required, etc,” said Dr Gideon Greenspan of Multichain, regarding AML cross-border checks.
The fact that more financial companies embrace the distributed ledger technology, demonstrates that its huge potential is being recognized.
Polina is an undergraduate student at Belarusian State Economic University (BSEU) where she is studying at the faculty of International Business Communication for a degree specializing in Intercultural Communication. In her spare time she enjoys drawing, music and travelling.