FinTechAutomationSWIFT initiates blockchain PoC application with major banks

SWIFT initiates blockchain PoC application with major banks

The proof of concept will test whether distributed ledger technology can be used by banks for improved reconciliation of their nostro accounts in real time.

SWIFT and a group of major global transaction banks are developing a proof of concept (PoC) application to test whether distributed ledger technology (DLT) can be used by banks to improve reconciliation of their nostro accounts in real time, optimising their global liquidity.

Australia and New Zealand Banking Group, BNP Paribas, BNY Mellon, DBS Bank, RBC Royal Bank and Wells Fargo are among the banks participating in the PoC; working with SWIFT to identify the challenges, define the specifications, build the application and ultimately test the concept. A further 20 banks will join the programme at a later stage to further validate and test the DLT concept. The results of the PoC will be presented at Sibos 2017 in Toronto this October.

The PoC supports SWIFT’s goal of making cross-border payments more efficient, a mission it has championed through the launch of the global payments innovation (gpi) initiative, launched in February to offer customers fast, transparent and traceable cross-border payments.

“The nostro DLT proof of concept is deeply embedded in the SWIFT gpi story of streamlining the cross-border payments system,” says Wim Raymaekers, head of banking markets and SWIFT gpi at SWIFT. “It allows us to explore how this maturing technology can provide a collaborative solution to what our gpi member banks have identified as a significant pain point – nostro accounts reconciliation.”

In developing the PoC, SWIFT is leveraging the recently released Hyperledger Fabric v1 technology, and combining it with key SWIFT assets, to ensure that information related to nostro/vostro accounts is kept private and seen only by the account owner and its correspondent banking partner.

The PoC application will use a private permissioned blockchain in a closed user group environment, with specific user profiles and strong data controls, and user privileges and data access will be strictly governed. Data stored on the ledger and the application programming interfaces (APIs) used to query and update it will also be designed to support ISO 20022 message formats.

Since the gpi launched, 12 gpi banks are sending several hundreds of thousands cross-border payments across the globe, and over 30 additional banks started their implementation project for live operations. In total, nearly 100 banks have signed up to SWIFT gpi, representing over 75% of all cross-border payments on SWIFT.

 

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