SWIFT ex­plores blockchain

East African Business Week - - NEWS/ADVERT - BY PAUL TENTENA

Brus­sels, BELGIUMSWIFT an­nounced the launch of a Proof of Con­cept (POC) to ex­plore whether dis­trib­uted ledger tech­nol­ogy (DLT) can be used by banks to im­prove the rec­on­cil­i­a­tion of their nos­tro data­bases in real time, op­ti­mis­ing their global liq­uid­ity. “Whilst ex­ist­ing DLTS are not cur­rently ma­ture enough for cross-bor­der pay­ments,[1] this tech­nol­ogy, bol­stered by some ad­di­tional fea­tures from SWIFT, may be in­ter­est­ing for the as­so­ci­ated ac­count rec­on­cil­i­a­tion,” says Wim Ray­maek­ers, Head of Bank­ing Mar­ket and SWIFT gpi at SWIFT. “This POC gives us the op­por­tu­nity to test DLT and de­ter­mine if it can be ap­plied to this par­tic­u­lar use case.” 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. This POC will test whether dis­trib­uted ledgers may be able to help banks rec­on­cile those nos­tro ac­counts more ef­fi­ciently and in real time, low­er­ing costs and op­er­a­tional risk. As part of SWIFT’S global pay­ments in­no­va­tion (gpi) ini­tia­tive, which seeks to de­liver a new stan­dard in cross-bor­der pay­ments, the new POC was scoped in col­lab­o­ra­tion with lead­ing cor­re­spon­dent banks. SWIFT gpi mem­ber banks can ap­ply to par­tic­i­pate in this POC, set to launch in early 2017. SWIFT will de­ploy open­source Hyper­ledger[2] tech­nol­ogy, and com­bine it with key SWIFT as­sets to bring it in line with the fi­nan­cial in­dus­try’s re­quire­ments. Us­ing a pri­vate blockchain in a closed user group en­vi­ron­ment, with spe­cific user pro­files and strong data con­trols, user priv­i­leges and data ac­cess will be strictly gov­erned. Damien Van­derveken, Head of R&D, SWIFTLABS and User Ex­pe­ri­ence at SWIFT, adds: “SWIFT will lever­age its strong gov­er­nance, PKI se­cu­rity scheme, BIC le­gal iden­ti­fier frame­work and liq­uid­ity stan­dards ex­per­tise to de­liver a dis­tinc­tive DLT POC plat­form for the ben­e­fit of its com­mu­nity.” SWIFT gpi was launched in De­cem­ber 2015 to de­liver a new stan­dard in cross­bor­der pay­ments. With more than 90 banks signed up, rep­re­sent­ing more than 75 per­cent of SWIFT’S cross­bor­der pay­ments traf­fic, the ini­tia­tive has seen tremen­dous in­dus­try sup­port and is set to go live in early 2017.

This POC gives us the op­por­tu­nity to test DLT and de­ter­mine if it can be ap­plied to this par­tic­u­lar use case

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