Considering the fact that the costs involved will be substantial, Swift’s trial is not enough to make banks want to make the jump.
Global financial messaging provider Swift has been working on a blockchain-based proof of concept (PoC) for nostro accounts systems this year. It was earlier assumed that they will be presenting the PoC at this month’s Sibos conference.
In a release, however, has shown that they may not be too keen on pursuing a blockchain-based solution despite the fact that it works in reconciling real-time financial communications. “DLT (distributed ledger technology) provides real-time visibility to both the account owner and its servicer on the available and forecasted liquidity on the nostro account and supports payment reconciliation and investigations by providing an enriched data model based on ISO 20022,” Swift says in a release. But while the technology works, they think blockchain technology is not ready for industry-wide adoption.
In terms of bank response, the problem is that it’s lacking in value propositions that would differentiate it from current processes enough to make banks want to make the jump, especially considering the fact that the costs for development will most definitely be substantial.
Swift therefore concluded that blockchain technology may not be the best solution for what they need. Damien Vanderveken, head of research and development at SwiftLab, says their final verdict should be out by the end of the year.
“Is blockchain the right technology to solve that business problem? What we have shown so far is quite encouraging: we believe it is the right fit and could solve the problem. But could we do it in another way? Yes, we could solve the problem by using another technology, and that’s one of the things we will confirm by the end of the year – how we are going to move it forward,” said Vanderveken. “Only then will we confirm whether we will do it with blockchain or actually, for example, to minimise the integration effort for the industry, if it may be better to do it differently,” Vanderveken told Global Trade Review.