On 30. January, announced the release of a large global Bank payment network SWIFT, a proof-of-Concept (PoC) for a Gateway named GPI Link. Thus, it is the Blockchain-a software company, R 3 is possible, to connect with Global Payments Innovation (GPI)-payments by SWIFT from its platform.
SWIFT has made a further step in the direction of the Blockchain-acceptance, although the company had in the past expressed concerns about the maturity of the technology. The SWIFT competition has, however, expressed their concerns and stated that the new System was not decentralised enough.
Short introduction to the relationship between SWIFT and Blockchain
SWIFT is an interbank Messaging service from Belgium, for 46 years, as well as a cooperative owned by approximately 11,000 member banks in over 200 countries. The network is processed according to the data of the Ministry of Finance of the United States ‚ worldwide transactions in the value of the equivalent of up to 4.4 trillion euros per day. Including more than half of all cross-border payments with a high value, what is it that makes SWIFT one of the most important players in the banking sector, according to the Financial Times.
The relationship between SWIFT and the Blockchain – the technology, which, apparently, can potentially contribute to the improvement of cross-border payments – was a bit difficult. Finally, the international banking network had established its dominance in the financial sector long before the Blockchain: In the 70s, the SWIFT has replaced the slow telex system through a unified code system to designate banks and to describe the transactions and to transfer financial messages faster and safer.
In December 2015, Wim Raymaekers, head of banking and financial markets at SWIFT has announced that for the first time that the Bank’s network of Fintech innovations – including Blockchain – could be integrated to enable faster and transparent cross-border payments.
In addition, published SWIFT, and the global consulting company Accenture in April of 2016, a joint report dealing with the use of Distributed Ledger technologies (DLT) in the financial services area. In particular, some of the Strengths of the Blockchain have been appreciated – for example, an efficient information dissemination, traceability, simplified calibration, and a confidence inspiring System and high reliability.
however, the report also notes that the technology is Mature enough to be used on an industrial scale. SWIFT and Accenture have argued that the technology of conformity would be missing with the legal provisions, standardization, identity framework, cyber defence, and scalability.
However SWIFT a year later, in April 2017, announced that it would use Hyper Ledger Fabric v 1.0 in order to update your process for cross-border payments. Hyper Ledger Fabric is a permission-based Blockchain Framework that is provided by the Linux Foundation.
So it was tested at the proof-of-Concept (PoC), whether DLT, cross-border payments more efficient, more transparent and faster. The technology has been used in the context of a larger program of SWIFT to improve the transparency and traceability of its cross-border payments through its GPI service, which was launched at the beginning of February 2017. Significantly, promises to GPI a „faster money use on the same day,“ – a long awaited update to the conventional banking system, in the typical international payments in three to five working days. Nevertheless, the GPI itself is technically a Messaging System, and although it is real-time and end – to-end Tracking supports, it is based not on the Blockchain.
PoC means, to test the feasibility of a project before it is fully realized. Therefore, SWIFT limited the Experiment to his DLT-Sandbox, rather than an untested product in the main network to introduce to the thousands of banks throughout the world daily depend on.
Initially belonged to the PoC members of SWIFT, 12 financial institutions – including the Australia and New Zealand Banking Group, BNP Paribas, BNY Mellon, and others. They had integrated their own node in the DLT Sandbox of the network. Later, in July of 2017, drew a SWIFT and 22 more banks to its test project, including Commerzbank, Société Générale and JPMorgan Chase Bank.
In March, unveiled SWIFT, that the PoC Test, the Blockchain had been completed. The Bank’s network was disappointed by the technology and declared that the Blockchain is not ready for Mainstream use. It further advances „are required before they can support production-ready applications in large, mission-critical global infrastructure,“ although the Tests themselves were „very good“.
As Damien Vanderveken, the head of research and development at SWIFT, who at the same time, the Financial Times said, to modernise a significant number of banks their systems drastically before you could use for your cross-border payments, with a Blockchain-based System. The DLT, myself, have proven to be, however, nevertheless, efficient.
according to Reports, the examination included the creation of 528 Sub-ledgers for 28 participating banks, in order to prevent that confidential information be disclosed to the competitors. Therefore, Vanderveken argued that to allow use for all SWIFT members, with thousands of banks – the establishment of 100,000-would require ledgers, which was due to maintenance problems is technically very complex.
However, Vanderveken also reported on positive results and said that DLT have contributed to the reconciliation of nostro accounts for lender. In Essence, a nostro account is the account of a Bank in a foreign currency with another Bank.
„Although the proof-of-Concept demonstrated that DLT could improve the Nostro liquidity management and reconciliation processes, he has also shown that certain conditions must be met in order for the banks all the benefits of a conversion to a DLT can benefit the process.“
SWIFT includes a partnership with R3 for the introduction of the GPI Link Expansion planned
On the 30. January 2019 announced SWIFT, a further proof-of-Concept. This time it was to test how to be a GPI-program could be applied to E-Commerce and trading platforms. Under the name GPI Link, the Gateway will enable, according to Reports, the software company R3, its Pto connect tri-deck with GPI-payments, the press release, the Cointelegraph had.
The release was first announced on the Morning of the same day by SWIFT CEO Gottfried leibbrandt at the Paris Fintech Forum:
„Our new GPI-platform is highly interoperable and open. And we had also always been the Connections to other networks. […] We announced a proof-of-Concept with the R3-Blockchain for trading, where you can direct payments on the trading platform in the way, and then come to the GPI. We explore the networking with a lot of things.“
Therefore, the user of the R3 is a media platform payments via GPI Link author, the GPI-payments with the banks, the users to conduct and acknowledgement of receipt via GPI Link a message back to the trading platforms, if you are completed. The proof-of-Concept will support is also reported to application programming interfaces (APIs), as well as SWIFT and ISO standard formats.
The proof-of-Concept will eventually be extended to other DLT-platforms, as well as Non-DLT, and to support E-Commerce trading platforms. However, R3 should be able to SWIFT, a start-up aid for the Expansion in the DLT-area: After R3 has only just launched at the beginning of this year Corda-network, the consortium of more than 300 partners from different industries on Board, to work together on the development of the Corda, of his Ethereum-based, Open-Source Blockchain platform, as well as its enterprise-oriented offshoot of Corda Enterprise.
In the press release for the announcement of GPI Link Luc Meurant, the head of marketing, SWIFT claimed that there is a greater demand for a DLT-based processing of Fiat money to crypto currencies:
„During the DLT-enabled trade is always in demand, is the demand for a resolution in crypto-currencies is still low. There is an urgent need for a fast and secure handling in the Fiat, but currencies. […] In view of the fact that the Corda platform is used by trading ecosystems, it was only a matter of course, these proof-of-Concept with the R3.“
According to the press release, the results of the recently announced proof of Concept will be presented in September 2019 in London.
Ripple or SWIFT – Who is decentralised?
Leibbrandt announced the PoC, while he was sitting next to Brad garlinghouse, CEO of Ripple (XRP), in a joint Panel. Ripple positions itself as a Blockchain competitor to the global interbank SWIFT network. Garlinghouse had only commented in November of 2018: „What we do every day, is actually SWIFT to replace.“
The Ripple-CEO said to Bloomberg on the Fintech Festival 2018 in Singapore:
„SWIFT said not too long ago, that it would not consider the Blockchain as a solution to the correspondence banking. Well over 100 of their customers, are telling us that they were of a different opinion.“
With the introduction of the GPI Link of SWIFT could see the Ripple forced to achieve xRapid and xCurrent, its Blockchain-powered Tools for the facilitation of cross-border Fiat transfers between financial institutions, with even better results.
in Particular, the xRapid-platform Ripple has proven Reports, that you can transaction to reduce costs by 40-70 per cent by foreign exchange providers to be made redundant. The transaction speed at the first test run had been increased to „a little more than two minutes“, as the company has tested in may of 2018, the payments between the United States and Mexico.
Since then, big players, such as the Santander Bank from Spain, the Malaysian credit giant CIMB Group Holdings Bhd and Japanese Bank and financial services company, MUFG join the cross – border payment network RippleNet. Although Santander is a Ripple Investor, joined the Bank in October 2018 and the SWIFT GPI program.
Garlinghouse has criticized the recent announcement of the SWIFT-CEOs, because the Bank network was centralized:
„I did, that decentralized systems will emerge in the course of time, probably as the winner. I don’t think that Swift is today. Swift is now a Messaging Framework in only one direction. It is not a liquidity provider. […] If we imagine an Internet of the value, it is a mixture of Messaging Frameworks in both directions – a real-time Chat Protocol, if you will – coupled with real-time liquidity.“
Therefore, the debate on the „Ripple or SWIFT turns“ to the use of Blockchain and decentralization. Garlinghouse is of the firm opinion that its network is less centralized. However, about xCurrent-platform Ripple uses the constant „inter-Ledger“Protocol „is not a Distributed Ledger,“ as David Schwartz, the chief cryptographer at Ripple, confirmed. Thus, the platform is not a completely decentralized solution.
Marcus Treacher, the senior Vice President of customer success at Ripple, explained to Reuters in June 2018:
„We have started with the classic Blockchain, which we love. The banks say that you can’t put the whole world on a Blockchain.“
GPI SWIFT in turn relies on the existing infrastructure and Cloud technology. As the inter-Bank Messaging giant has researched the Blockchain, he was with the research to be particularly careful. He has not decided yet whether he should use outside of proof-of-Concept.
In addition, leibbrandt was quite conservative, he criticized in his speech, crypto-currencies. After he had summoned the audience to the decline of Bitcoin (BTC) into the memory, said SWIFT CEO:
„I that the crypto-currency, XRP accounts for the largest part of the value proposition of Ripple. Here we actually see that the banks are reluctant due to the volatility of the currencies, things in a crypto-currency to convert.“
Interestingly, R3 on the 30. January, it was announced, SWIFT GPI in the decentralized application (DApp) is to integrate the universal payments called Corda Settler. This, in turn, XRP is offering as the only crypto-currency for billing. R3 and Ripple had a legal dispute over alleged mutual breach of contract, which was settled in September of last year, finally, after a year.
However, both SWIFT and Ripple of the other, could Players looking to get faster, decentralized and cross-border payments to competition: in Particular, Alibaba’s subsidiary Ant Financial is to call here from China. This has already tested their first Blockchain Transfers, and it is alleged a transaction in only three seconds sent.