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Lloyds Bank has joined 27 other banks in a project to use blockchain technology to support the accounts they have in other countries, known as nostro accounts.
The contributions of the various banks helps to ensure the technology is properly tested out and validated.
The project, organised by the Society for Worldwide Interbank Financial Telecommunication (Swift), will enable banks to manage nostro accounts, which are used to make cross-border payments, in real time.
Swift said banks could not currently monitor their accounts in real time because of a lack of intraday reporting coverage.
Damien Vanderveken, head of research and development at Swift Lab, said: “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.”
Swift, which is owned by banks, is a not-for-profit co-operative that provides a network to send financial transaction messages. It was set up in 1973 to enable banks to share communications infrastructures and has added hundreds of banks and many new payment-related services over the years. Swift demonstrates how even companies engaged in cut-throat competition can share core business processing resources to cut costs. It also provides a test-bed for pilots using technology such as blockchain.
The project originally involved six banks: Australia and New Zealand Banking Group, BNP Paribas, BNY Mellon, DBS Bank, RBC Royal Bank and Wells Fargo. It has recently added a further 22 banks to help validate the work done. The new group includes ABN AMRO, Santander, JPMorgan Chase Bank and the UK’s Lloyds Bank.
Read more about Swift
- The Society for Worldwide Interbank Financial Telecommunication (Swift) has developed an application that analyses payment data to help identify possible financial crimes.
- Community-based cloud services for banks, including an app store for financial services organisations, are being incubated on the Society for Worldwide Interbank Financial Telecommunication (Swift) network.
“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,” said Swift.
Collaboration between banks is vital, said Wim Raymaekers, the organisation’s head of banking markets. “The 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,” he added.