SWIFT’s New Blockchain Pilot Project Aims to Drive Efficiency Around Corporate Events

Leading secure financial messaging system SWIFT is testing out blockchain in a pilot project with fintech company Symbiont Inc.

Previously, SWIFT explored ways how to enter the central bank digital currency space.

SWIFT’s Blockchain Experiment

The collaboration aims at driving efficiencies in the transmission of data related to corporate events like dividend payments and mergers, a Bloomberg report said, adding that Citigroup, Vanguard, and Northern Trust will also participate in the project.

“By bringing Symbiont’s Assembly and smart contracts together with SWIFT’s extensive network, we’re able to automatically harmonize data from multiple sources of a corporate action event,” said Tom Zschach, Chief Innovation Officer at SWIFT.

The experiment will focus on data tracking and transparency to identify discrepancies, the coverage said.

Headquartered in Belgium, The Society for Worldwide Interbank Financial Telecommunication (SWIFT) is a leading provider of secure financial messaging systems. It’s a member-owned cooperative that facilitates inter-bank money transfers both domestically and globally.

SWIFT connects over 11,000 banking and securities organizations, market infrastructures, and corporate customers in over 200 countries and territories.

Following Digital Assets Closely

In May, SWIFT reported that it was working with the French information technology services and consulting company Capgemini on CBDC interoperability. The objective of the experiment is to leverage digital currency for “frictionless” cross-border transactions. Through this pilot project, SWIFT aimed at addressing three use cases – CBDC to CBDC, fiat to CBDC, and CBDC to fiat.

The financial messaging system is also looking at interoperability between other digital agencies and currencies.

In December, SWIFT announced plans to enter the asset tokenization market, expected to surge above $24 trillion by 2027, as per its estimation. As tokenization of illiquid assets such as stocks, bonds, commodities, and real estate is increasingly becoming popular, banks and securities firms are responding to the latest trend. SWIFT is aiming to leverage fractionalization to enhance liquidity and accessibility.

“SWIFT plans a series of experiments in Q1 2022 leveraging its trusted role as a central platform to explore the issuance, delivery versus payment (DVP) and redemption processes to support a frictionless and seamless tokenized asset market,” it said in a report.

Fight for Faster and Cheaper Bank Transfers

The fight for better, faster, cheaper bank transfers has intensified, with some blockchain firms aggressively gnawing at SWIFT’s dominance, which has processed 7.633 billion financial messages so far this year and looks set to cross the 10-billion mark.

However, with rising interest in cryptocurrencies, CBDCs, and stablecoins, some analysts believe that SWIFT’s relevance may decline in the near future. Ripple Labs’ CEO Ripple Brad Garlinghouse, at the beginning of 2019, announced that XRP was closing the gap with SWIFT in this space.

“What Ripple is executing every day is to take over Swift. Currently, we’ve signed up over 100 swift-enabled banks that are now using the Ripple technology. The technology used by the banks today that Swift developed years back hasn’t really evolved or even kept up with the current market,” Garlinghouse had said.