Will SWIFT bite Ripple? Global banks joins SWIFT gpi blockchain

With its global reach, SWIFT gpi is regarded by banks as the natural place to collaborate and innovate cross-border payments

Brussels, 6 July 2017 – SWIFT announces today that 22 additional global banks have joined its blockchain proof of concept (PoC), designed to validate whether the technology can help banks reconcile their international nostro accounts in real time. The PoC is part of the SWIFT gpi (global payments innovation) service, the new standard for cross-border payments.

The banks that have recently joined the PoC include: 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.

These banks will test and validate the PoC’s blockchain application, currently under development by SWIFT and a group of six founding banks that launched the PoC earlier in the year. Working independently of the founding banks, the 22 institutions will act as a validation group to further test the application and evaluate how the technology scales and performs.

“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.”

Launched in January 2017, the PoC aims to help banks overcome significant challenges in monitoring and managing their international nostro accounts, which are crucial to the facilitation of cross-border payments. Currently, banks cannot monitor their account positions in real time due to lack of intraday reporting coverage. As such, the PoC recognises the need for banks to receive real-time liquidity data in order to manage funds throughout the business day. At its core, the PoC builds on the rulebook defined by SWIFT as part of the recently published intraday liquidity standard.

“The potential business benefits ensuing from the PoC are clear,” says Damien Vanderveken, Head of R&D, SWIFTLab and UX at SWIFT. “If banks could manage their nostro account liquidity in real time, it would allow them to accurately gauge how much money is required in each account at any given point, ultimately enabling them to free up significant funds for other investments.”

In developing the PoC, SWIFT is leveraging the recently released Hyperledger[i] Fabric v1.0 technology, and combining it with key SWIFT assets, to ensure that all the 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. User privileges and data access will also be strictly governed.

Moving forward, the PoC blockchain application will undergo testing over the summer months, with the results scheduled to be published in September and presented at Sibos in Toronto in October.

The PoC is being undertaken as part of SWIFT gpi, a new service that is revolutionising the cross-border payments industry by combining real-time payments tracking with the speed and certainty of same-day settlement for international payments. Since it became available in January 2017, 20 global transaction banks have begun actively using or implementing the SWIFT gpi service, with another 50 in the implementation pipeline.

Please see below quotes from the participating banks:

"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. 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."- Floor Kurstjens, Director of Operations, ABN AMRO Bank

“This proof of concept has value to us as banks, that if we get it right, we can identify unwanted and fraudulent transactions inter day and not only when we do our nostro reconciliations.” - Sean Mouton, Chief Technology Manager, ABSA

"SWIFT gpi has made an impressive improvement towards certainty and transparency in the payment landscape for our customers. BBVA is fully committed to innovation in the DLT/​Blockchain area and we look forward to participating in the enhancement of the Nostro reconciliation.​ We are convinced that collaborating with SWIFT will bring the essential network effect to make this happen" - Raouf Soussi, Head of Global Innovation and Multicountry Projects, BBVA

“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

“The DLT based nostro reconciliation approach has the potential to change financial practice and exchange. Commerzbank is delighted to participate in this proof of concept to build standards and enhance the portfolio of SWIFT gpi. SWIFT has often proved in the past to be the right place for modernization ideas and the SWIFT gpi initiative underpins SWIFT’s role in this respect.” - Ingrid Weißkopf, Head of FI Products and Advisory at Commerzbank AG, Frankfurt

“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.”- Bernard Carless, Head Settlement & SWIFT, FirstRand Bank

“SWIFT gpi is improving cross border payments in terms of users’ experience and speed of payments; therefore banks’ treasuries must adapt their own position keeping systems and the use of DLTs might become the core technology to help them. Intesa Sanpaolo is very active in innovative technologies and is willing to help build this new route to the future of cross border payments.” - Stefano Favale, Head of Global Transaction Banking, Intesa Sanpaolo S.p.A.

“Mashreq is delighted to be participating in the SWIFT led multi-bank PoC powered by Distributed Ledger Technology for Nostro Account reconciliation under the SWIFT gpi program. We believe SWIFT, covering the largest network of banks and standardized messaging protocols, is strategically positioned to revolutionize the way banks manage their processes, and paves a path towards creating a true digital community, amongst the many other initiatives to follow. Mashreq’s digitisation roadmap is closely aligned with the SWIFT gpi program and we look forward to working with SWIFT to make this partnership a success.” - Rahul Jayakar, Head of Global Transaction Services Products & Trade Mashreq Bank

“With the payment industry undergoing a major transformation, Société Générale is always keen to be at the forefront of such innovation, exploring new technological solutions. When learning about the Proof of Concept launched by SWIFT on how the Distributed Ledger Technology incorporated into the SWIFT gpi framework could improve the real-time nostro/vostro reconciliation, Société Générale naturally expressed a strong interest in this initiative. Being a gpi member since the beginning, Société Générale is very proud to participate in this PoC which is part of phase 3 of the gpi roadmap. Nostro reconciliation is identified by the gpi vision group as a priority use for DLT exploration.” - Jean-François Mazure, Head of cash Clearing services Société Générale

“In the last few years there has been extensive industry talk about Fintech disruption and innovation in the world of correspondent banking, where banks have had to subsequently react. SWIFT gpi is a collective response to some of these threats.. Being part of SWIFT global payments innovation (gpi), and working with our industry counterparts, is giving correspondent banks a platform to examine and refine current processes, and to collaborate and explore different, more efficient ways of doing things. Ultimately, our clients will benefit most from this initiative. SWIFT gpi is one of the more exciting initiatives in correspondent banking in recent years.” - Kent Marais,Head TPS Product Management, Standard Bank South Africa

“We are very encouraged on the adoption rates and the payments traffic of the SWIFT gpi service, only six months after it went live. Standard Chartered has been involved in the gpi initiative as a pilot bank and a founding member in its vision group. The work on the DLT PoC will allow us to continue improving on the cross-border payments experience for our clients by making our internal processes around the critical step of NOSTRO reconciliation, highly efficient.” - Anurag Bajaj, Managing Director and Global Head of Banks,Transaction Banking at Standard Chartered Bank

“Streamlining the process of nostro reconciliation has been a long-standing challenge for our industry. It is significant that gpi banks are going to address it in the foreseeable future. Sumitomo Mitsui Banking Corporation (SMBC) is willing to deliver more efficient and effective services to our customers through SWIFT gpi.” - Airo Shibuya, Senior General Manager, Transaction Business Planning Dept., Sumitomo Mitsui Banking Corporation

“SWIFT’s global payments innovation (gpi) studies are proving the value of collaboration and transformation across the entire international payments value chain. Real time visibility of nostro reconciliation is another leap forward in efficiency for correspondent banking, as we endeavour to improve the customer experience in cross-border payments.” - Westpac’s General Manager of Global Transaction Services Di Challenor

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.