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SWIFT to Explore the Potential of Blockchain to Provide Real-Time Reconciliation

The Society for Worldwide Financial Telecommunication (SWIFT) is exploring the potential of distributed ledger technology for banks to provide real-time reconciliation of their databases for accounts they hold in other banks in a foreign currency. Proof of Concept (PoC) has already been launched to determine if distributed ledger technology could help banks reconcile their nostro databases in real time.

Under the current correspondent banking model, banks need to monitor the funds in their overseas accounts via debit and credit updates and end-of-day statements. The maintenance and operational work involved represents a significant portion of the cost of making cross-border payments. This PoC will test whether distributed ledgers may be able to help banks reconcile those nostro accounts more efficiently and in real time, lowering costs and operational risk. As part of SWIFT’s global payments innovation (gpi) initiative, which seeks to deliver a new standard in cross-border payments, the new PoC was scoped in collaboration with leading correspondent banks. SWIFT gpi member banks can apply to participate in this PoC, set to launch in early 2017.

SWIFT will deploy open-source Hyperledger technology, and combine it with key SWIFT assets to bring it in line with the financial industry’s requirements. Using a private blockchain in a closed user group environment, with specific user profiles and strong data controls, user privileges and data access will be strictly governed.

News Characteristics

Date : Jan 12, 2017
Region : North America
Industry : Banks
Function : Operations and IT
Sub-Function : IT Modernization/Transformation