SWIFT stands for the Society for Worldwide Interbank Financial Telecommunication. Recently, it released a statement describing its plans to introduce a Global Payment Initiative service (GPI) which will be a good competition for fintech and blockchain systems operated by big companies such as Transferwise, Ripple and JP Morgan.
Though the system is still in its beginning phase, it aims to “build the foundation of a new integrated and interactive service that will significantly improve efficiencies in the payments process and which will ultimately be made available to all 10,000 banks across the SWIFT network.”
The GPI was tested in October and was a success. The GPI was able to perform payment across borders and participating in the testing were banks in Thailand, Singapore, Australia and China. The new trial system can fix errors in payment procedures nonexistent by efficiently identifying and removing them. The GPI will also ensure that all information required to perform a hitch-free payment is provided. SWIFT desires that the GPI will make payments service faster, with cheaper costs and minor delays and that the overall experience of customers will be improved.
Face to Face With the Blockchain
Now, the attention of SWIFT has shifted towards fintech startups who make use of the blockchain technology to deliver a more cost friendly version of the same services they offer. An example is the Interbank Information Network (IIN) from JP Morgan. Ever since it became unveiled in September, it has acquired over 130 banks as its members, and some of those banks include Societe Generale And Satander.
The Interbank Information Network has stated that their aim is to reduce the friction experienced during the process of global payments and also to make it possible for beneficiaries to receive payments at a much faster rate with lesser protocols. IIN is still experiencing growth in its membership and has expressed its commitment to speedily remove compliance issues as well as errors in the banking process through the use of a distributed ledger which will be used for mutual sharing of information.
From the other point of view, the GPI operates with an API, Application Programming language, which will make it possible for banks to work together to eliminate delays and errors during payment procedures by easily confirming the account of a recipient through the data made available by each bank.
Here is how SWIFT put it:
“Fully integrated with GPI payments, the service will facilitate real time dynamic bank-to-bank interaction using APIs to improve the predictability and efficiency of international payments, and look at using predictive analytics. It will later be complemented with a post-payment investigation and reconciliation service that will allow for fast resolution of the remaining factors, typically arising from compliance or regulatory requirements, which can slow down the payments process.”
The pre-confirmation service for the trial GPI will begin in early 2019, and 15 banks have been selected to participate such as Bank of China, JP Morgan, Citigroup, Barclays and lots more. SWIFT has stated that its service will make payments transparent for both the originators and recipients and will also make it possible to predict the routes, delivery and cost of their funds.