Payments network SWIFT sees no urgent need to add distributed ledger technology (DLT) to its latest, cutting-edge offering.
The view from a senior SWIFT executive arrived in the wake of the network’s announcement that a host of transaction banks are now live on its global payments innovation (gpi) service, which aims to significantly streamline corporate transactions.
Wim Raymaekers, who oversees the new initiative, explained that players in the banking industry have not yet incorporated blockchain-based tools into any of their mainstream technology setups.
As such, it is not the right time for SWIFT to harness that technology.
In its announcement, SWIFT noted that the gpi presents corporate treasurers with a number of significant benefits – particularly its tracker application.
That feature enables banks to provide treasuries with real-time, end-to-end updates on the status of their payments – including instant confirmations of when monies have been credited to beneficiaries.
In addition, remittance details such as invoice references are transferred to beneficiaries completely unaltered.
Speaking to Global Trade Review, Raymaekers said: “There was a very strong call among banks for action to deliver value today. Blockchain, or DLT, we believe, is not ready for wholesale payments yet.”
He explained: “Banks across the world do not have a DLT protocol ready for usage – it’s not within their back-office systems. Our technology is. That’s why we said, let’s use that because it’s available, and build on top of that.
“We did not want to wait a couple of years to do something. Our strategy was to deliver value today, and explore new technologies in parallel. That’s a pragmatic and strategic way to go about it.”
He added: “You cannot just rip out what banks have today and put something in that is not proven.”
In terms of how SWIFT is, as Raymaekers suggests, exploring new technologies, the organisation revealed in January that it is working on a Proof of Concept (PoC) for blockchain-based tools with the gpi in mind – to be applied when DLT in the banking industry has reached the required level of usage.
Raymaekers said: “While existing DLTs are not currently mature enough for cross-border payments, this technology – bolstered by some additional features from SWIFT – may be interesting for the associated account reconciliation.
“This PoC gives us the opportunity to test DLT and determine if it can be applied to this particular use case.”