Global payments network Swift builds blockchain capability

The Society for Worldwide Interbank Financial Telecommunication (Swift) is building a blockchain-based system to record digital payments.

The not-for-profit co-operative, which enables inter-bank payments, announced the project at this year’s Sibos conference in Frankfurt.

A group of 30 banks are working with Swift and blockchain software company Consensys on the project to create a ledger for tokenised payments.

Swift will scale the use of blockchain through its large and well-established network, which sends millions of financial transaction messages every day between over 11,000 financial institutions and across more than 200 countries and territories.

The work aims to create interoperability between distributed ledger technology and existing fiat currency infrastructure.

Swift began operating in 1973, with 239 banks sharing the communications service.

Work has already begun on the first use case, focused on 24-hour cross-border payments, and the organisation will work on plans for further use cases.

Swift is building the infrastructure that the banks will use to exchange digital value through tokens.

Swift said in its announcement: “It is envisaged that the ledger – a secure, real-time log of transactions between financial institutions – will record, sequence and validate transactions and enforce rules through smart contracts.”

The organisation’s CEO, Javier Pérez-Tasso, said: “We provide powerful and effective rails today and are moving at a rapid pace with our community to create the infrastructure stack of the future.”

Blockchain is a distributed ledger technology (DLT) that’s shared across a network of computers to keep a digital record of transactions. The technology is known for its role in cryptocurrency systems, where it maintains a secure and decentralised record of transactions. However, its applications extend beyond cryptocurrencies to fields including supply chain management, healthcare and finance.

Each computer in a blockchain network maintains a copy of the ledger where transactions are recorded to prevent a single point of failure. All copies of the blockchain are updated and validated simultaneously.

Banks involved in designing the blockchain ledger include NatWest, HSBC, Deutsche Bank, Emirates NBD and Banco Santander.

Martin Tricaud, group head of wholesale banking at First Abu Dhabi Bank (FAB), described the blockchain-based shared ledger from Swift as “a defining moment for the future of global payments”.

“[We are] committed to enabling seamless, real-time cross-border settlement rails that support the growth of trade, investment, and remittances flows across our region and beyond.”

Manish Kohli, head of global payments solutions at HSBC, said: “Our work is driven by a common ambition: to make cross-border payments faster, smarter and always available. This collaboration complements HSBC’s own initiatives and innovation within the digital currency space; by bringing together our solutions and expertise with Swift’s global network capabilities, we can help shape the future of global payments for the benefit of our customers and industry.”

NatWest’s head of group payment and digital asset strategy, Lee McNabb, said: “Swift’s blockchain-based ledger provides the foundational infrastructure needed for trusted, real-time, cross-border payments alongside existing ways of moving money.”

Chris Skinner, fintech industry expert and CEO at The Finanser,  said this not particularly new. "This latest development aims is to provide secure, regulated, real-time messaging and follows in the path of other networks like MasterCard and Visa to tokenize assets and monetary movements in a secure and controlled manner. The fact they are doing this with a group of large banks is significant, as is the fact that the announcement follows legislation like the US Genius Act promoting the use of stablecoins. It is a natural reaction."