Global financial messaging service, SWIFT or the Society for Worldwide Interbank Financial Telecommunication has partnered with Chainlink to develop a blockchain-based money transfer service. Moreover, the company aims to cater to financial institutions with the ability to transact across blockchains– just like blockchain bridges.
Services offered by SWIFT are used by 11,000 banks across the globe for their cross-border fiat remittance needs. On average, SWIFT carries over five billion messages in a year and just for the month of August the system recorded over 44.8 million messages per day.
The collaboration was announced yesterday at the SmartCoin 2022 conference in New York by Sergey Nazarov, the co-founder of Chainlink. He was also accompanied by SWIFT strategy director Jonathan Ehrenfeld Solé who said that there is an “undeniable interest” from traditional institutions and their investors in digital assets. He also claimed that the same players in traditional finance want access to both traditional financial instruments and the new-age digital assets on a single platform.
One of the major problems faced by SWIFT is the speed of money transfers, which in some cases can take days to complete. This is the primary reason the world’s largest money transfer firm is exploring distributed ledger technology, blockchain-based technologies and central bank digital currencies (CBDCs) to facilitate faster payments.
Currently, both companies are working on a “proof-of-concept” project which uses Chainlink’s Cross-Chain Interoperability Protocol (CCIP). It enables SWIFT to conduct token transfers across blockchains (almost all of them). Nazarov claims that this initiative will boost the adoption of DLT blockchains across capital markets and traditional finance.
As per Chainlink, the initiative will allow SWIFT-associated banks to gear themselves up with blockchain capabilities without integrating, replacing or developing their systems. The collaboration, if successful, will save enormous costs for banks.
Industry executives like Mastercard’s CEO, Michael Miebach have claimed on occasions that SWIFT will cease to exist in five years as CBDCs will become more relevant. It could be the case if SWIFT would have entirely ignored the blockchain/DLT scene.
Recently, SWIFT also partnered with fintech startup Symbiont to use their patented technology platform Assembly to provide accurate data to banking institutions. SWIFT also aims to utilize Symbionts smart contracts to generate a network effect. The programme also included Northern Trust, Citigroup, American Century Investments, and Vanguard.