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International payments efficiency: SWIFT GPI initiative aims are huge & ambitious

When SWIFT’s Global Payment Innovation initiative was launched in 2014/2015* there were grumbles from ex-SWIFT people: “We thought of that and proposed a similar (better) solution in the early 1970s, but the board turned it down due to politics. Nothing is new.”

Oh, but some things are really new:

  • SWIFT’s GPI initiative goes much wider and deeper than the ideas proposed in the 1970s
  • block chain distributed ledger technology didn’t exist then. 

The depth and extent of SWIFT and member banks thinking about international payments efficiency is slowly being revealed. The GPI initiative doesn’t just mean Payment Tracker, the Directory and the Observer, it could also include a block chain solution to enable GPI member banks to reconcile their nostro databases in real time. The GPI initiative is about really improving the overall efficiency of international payments.

New block chain proof of concept project

SWIFT have announced the launch of a Proof of Concept (PoC) to explore whether distributed ledger technology (DLT) can be used by banks to improve the reconciliation of their nostro databases in real time, optimising their global liquidity.

Under the current correspondent banking model, banks need to monitor the funds in their overseas accounts via debit and credit updates and end-of-day statements. The maintenance and operational work involved represents a significant portion of the cost of making cross-border payments. This PoC will test whether distributed ledgers may be able to help banks reconcile those nostro accounts more efficiently and in real time, lowering costs and operational risk.

The new PoC was scoped in collaboration with leading correspondent banks. SWIFT gpi member banks can apply to participate in this PoC, set to launch in early 2017.

“Whilst existing DLTs are not currently mature enough for cross-border payments,1 this technology, bolstered by some additional features from SWIFT, may be interesting for the associated account reconciliation,” says Wim Raymaekers, Head of Banking Market and SWIFT gpi at SWIFT. “This PoC gives us the opportunity to test DLT and determine if it can be applied to this particular use case.”

The block chain technology

SWIFT will deploy open-source Hyperledger2 technology, and combine it with key SWIFT assets to bring it in line with the financial industry’s requirements. Using 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. 

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* SWIFT gpi was launched in December 2015 to deliver a new standard in cross-border payments. With more than 90 banks signed up, representing more than 75 percent of SWIFT’s cross-border payments traffic, the initiative is set to go live in early 2017.


CTMfile take: In the 1970s improving the structure on international payment was killed by some large member banks protecting their income streams. Today, the pressure is coming from new players coming into the payment business and the fintech revolution which is having an impact (nowhere near as big as some people claim), so banks are having to accept innovative ways of carrying out payments. Nevertheless, SWIFT and the member banks are to be congratulated on the GPI initiative which is critical to the efficiency of international payments.

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