Its proof of concept seeks to replace the current correspondent banking model of monitoring funds in overseas accounts via debit and credit updates and end-of-day statements.
Blockchain technology could alleviate the operational burden this represents, according to SWIFT, with distributed ledgers having the potential to reconcile nostro accounts more efficiently and in real time, lowering the costs of and operational risks in cross-border payments.
Open-source Hyperledger technology will be combined with key SWIFT assets to bring it in line with financial services requirements.
Testing of the proof of concept will be conducted on 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, according to SWIFT.
Wim Raymaekers, head of banking market at SWIFT, commented: “Whilst existing distributed ledger technologies are not currently mature enough for cross-border payments, this technology, bolstered by some additional features from SWIFT, may be interesting for the associated account reconciliation.”
“This proof of concept gives us the opportunity to test distributed ledger technology and determine if it can be applied to this particular use case.”
The proof of concept comes as part of SWIFT’s global payments innovation initiative, which seeks to deliver a new standard in cross-border payments.
SWIFT global payments innovation initiative member banks can apply to participate in this proof of concept, which is set to launch in early 2017.