SWIFT (Society for Worldwide Interbank Financial Telecommunication) has released their own global payment network to challenge other emerging cross-border payments startups.
According to a report done by the Financial Times, Swift is developing a brand spanking new system that should reduce errors and delays on the network by allowing financial institutions to share data on a bilateral basis.
One thing that should be noted is that this system will not be based on blockchain. They’ve decide to instead use an application programming interface (API) which allows financial institutions to access one another’s data in order to verify bank account number prior to payments. The purpose behind this is to cut delays previously slowed down they payment networks.
Swift will definitely have some heavy competition in the Fintech industry such as Ripple, Revolut, and TransferWise being one of their more fiercer competitors on the scene. Each of these competitors have set their goals to develop their own system that offers better, faster and cheaper cross-border payments.
Currently, a total of 15 banks have been confirmed to be participating in the trail, this includes JP Morgan. Luc Meurant, CMO of Swift, says the new system will process payments much faster.
“We know that there are still some payments which are badly formatted and missing some information.
Instead of correcting that later in the chain and delaying payment, we are trying to anticipate as many of those issues as possible (with pre-validation) so payments can be processed faster.”
Swifts new payment system is quite interesting but, it’s going to be quite difficult to sell to most people, especially with their interesting disuse of blockchain for their system. We’ll have to see how this works out for them in the future and how their competitors decide to react to this new system on the market.
What are your thoughts on this?