Bringing in its own new blockchain ledger to the table, financial messaging network operator Swift seeks to repeat – in the tokenised world – what it successfully achieved in the traditional financial sector: getting the world’s financial industry to perform mutual transactions in a way they have agreed on. A panel at Sibos on Tuesday discussed the pros.
“This isn’t about who’s the first to the party but about who is the first to scale,” says Swift’s head of strategy Jonathan Ehrenfeld, promising that his solution will be able to do just that. The initiative had been announced with a press release on Monday morning.
Supported, on stage in Frankfurt, by strongly positive representatives for two of the 37 banks that have so far endorsed the initiative, he shared high-level explanations of why it is considered needed, and how the first target application will be the enablement of interbank payments “24/7”, so at any hour of the day or night, and any weekday. Overall, they applauded not mainly the technical features of the project (important system design decisions are still expected for the upcoming months), but rather the degree to which the institutions have been convinced to align.
“That is not to be underestimated, it’s a little like herding cats. I have been on the calls talking to the legal teams, getting all the agreements. That’s a really big step,” says Jennifer Doherty, chief operating officer for transaction banking at Standard Chartered Bank. She likens the new blockchain venture to the original cause behind Swift’s creation in the 1970s: the need for the industry to align on payment-related messaging method.
Seeking end to just-in-case
“The second thing is a commitment to interoperability. Again, that is what we have signed up to do: to explore this and to figure out how we create that. I think the third thing has to be continuous regulatory engagement.”
She describes the reasons to join as clear to see; financial players need to move from having to rest on “just-in-case” liquidity, to being able to trust that they can access resources “just-in-time”.
“I don’t need to explain to a room full of bankers that the demand for 24/7 payments from our corporate clients, many of whom are here, is increasing, not decreasing. And so, I think this is a big step in the right direction to help achieve that. Having the payment, the data, and the digital asset that is all interoperable is really important. We’ve been experimenting in this field for quite some time, but the biggest challenge that we have faced is the interoperability (or lack thereof) and fragmentation, so for us, it’s a no-brainer.”
Mitigates handling – and its risks
Lewis Sun, HSBC’s global head of domestic and emerging payments, emphasised that moving towards for example the 24/7 model would also support the bank’s backend operational efficiency.
“If you look at why tokenisation has value in the operations, one key thing is that it is designed to be digital native, fully automatic, completely getting rid of manual interventions. From that angle, essentially, having such a model for even some high-end institutional use cases can be extremely valuable for our operations,” he says.
“And a second point is probably around risk. Payments are always a high-risk business. … If we can design a robust infrastructure for both in-house and cross-bank transfer, that can help us to largely mitigate the risk of making payments, especially for institutional use cases.”
Sibos 2025 plays out in Frankfurt from 29 September to 2 October, with about 12,000 registered delegates. We are there, overview our coverage here.
