The Society for Worldwide Interbank Financial Telecommunication (Swift) has issued a preliminary report stating blockchain can make cross-border payments more efficient.
The distributed ledger technology, originally developed for bitcoin payments, can also help banks reconcile Nostro accounts, or those being held by a bank on behalf of another bank owning the account, Swift said.
Swift's proof of concept findings indicated that a Swift-developed distributed ledger technology "can deliver the business functionalities and data richness required to support real-time liquidity in monitoring and reconciliation."
The blockchain testing of the past seven months with 33 global transaction banks was part of Swift's Global Payments Innovation project designed to get banks using similar standards, processes and technologies.
Testing of blockchain also demonstrated real-time visibility to both the account owner and its servicer of the Nostro account, while supporting payment reconciliation and investigations provided through the ISO 20022 standard common for global transactions.
“The distributed ledger technology proof of concept supports Swift’s goal of making cross-border payments more efficient," Wim Raymaekers, head of banking market and GPI at Swift, said in a Friday press release. "It's a mission we have championed through Swift's GPI, which offers customers fast, transparent and traceable cross-border payments.”
But the testing also found some challenges, including the need to develop unique value propositions in response to the different levels of sophistication, automation and past investments of banks. In addition, Swift said, it is crucial that blockchain integrate with legacy back-office applications and co-exist with current processes at the banks.
Swift, acknowledging that blockchain is still in its earliest testing phases, will finish its proof of concept report next month.