SWIFT explores the use of blockchain technology to improve efficiency
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(Kitco News) - The Society for Worldwide Interbank Financial Telecommunication (SWIFT), which is the messaging system used by financial institutions worldwide, has revealed that it is testing out blockchain via a pilot program launched with the blockchain enterprise company Symbiont.
According to the post from SWIFT, several notable giants of the financial world will be joining SWIFT on the project, including Citigroup Inc, Vanguard, and Northern Trust. The goal of the pilot program is to drive “efficiencies in communicating significant corporate events,” like dividend payments and mergers.
The SWIFT system currently delivers secured messages between more than 11,000 companies from over 200 countries and territories, helping to manage trillions of dollars in transactions.
Through the new pilot project, SWIFT will utilize Symbiont’s ‘Assembly’ platform, which has smart contract and blockchain capabilities, to “create a network effect that leverages the 11,000+ institutions connected to SWIFT globally,” the post said.
The overall goal of the project is to increase the efficiency of the SWIFT system, according to Tom Zschach, Chief Innovation Officer at SWIFT.
“By bringing Symbiont’s Assembly and smart contracts together with SWIFT’s extensive network, we’re able to automatically harmonize data from multiple sources of a corporate action event,” Zschach said. “This can lead to significant efficiencies.”
To achieve its desired goal, corporate action data from SWIFT messages will be translated by the “SWIFT Translator” tool and uploaded to Symbiont’s blockchain. From there, smart contracts are used to “compare information shared between participants and flag discrepancies, contradictions and inconsistencies across custodians.”
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Symbiont’s private blockchain solution is expected to help solve inefficiencies in the financial marketplace by increasing transparency through the creation of a single unalterable record that provides a digital audit trail, privacy, versatility and the delivery of important statistical data.
“If the solution proves successful, intermediaries would need to field fewer queries from clients about corporate action data. It also means global custodians and asset managers could reduce the number of people who spend their time manually scrubbing corporate action data,” Zschach said.
The pilot is currently in development and being tested by a select group of participants that will provide feedback in September. If it’s successful, SWIFT intends to extend coverage to more corporate event types and will assess the possibility of bringing it to production for the wider SWIFT community.