Swift, the communications platform that connects thousands of banks, has improved the correspondent banking arena with faster and more transparent cross border payments – part of a possible roadmap to integrate with new technologies such as blockchains.
Swift said the initiative will be implemented early in 2016, which in terms of banking equals "the speed of light".
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Wim Raymaekers, global head of banking markets at Swift, said: "We can look at changing correspondent banking settlements and maybe having blockchain technology rather than bilateral correspondent accounts."
He said achieving nostro/vostro settlement between cross-border accounts involves a messaging layer and settlement layer. "You can improve it over time when needed. That’s the strategic roadmap. But you cannot just unplug it and put something else in there just like that. That’s not realistic. Banks have built that into their systems for compliance, you have to maintain that level of control," Raymaekers said. What is a private blockchain?
A blockchain is a shared ledger of transactions and data entries, a copy of which is held by everyone on a given network. As it is updated and verified by the network, data is time-stamped into blocks. The shared data becomes a link in an encrypted chain and is both tamper-proof and completely auditable.
Private or gated use cases for blockchains, popular with banks at the moment, will not operate in a trustless environment, as is the case with public blockchains like Bitcoin. A private consortium of banks or other financial entities operating blockchains will obey legal obligations in order to validate transactions.
Such use cases can putatively deliver efficiency and cost savings to financial systems, such as reducing the clearing time of securities trading from three days to near instantaneous. Swift has been kicking the tyres of various blockchain technologies in its labs and […]
