SWIFT Announces DLT Blockchain Pilot Success


Financial messaging provider SWIFT reports, alongside 34 international transaction banks that seek to determine how the blockchain or Distributed Ledger Technology (DLT) Proof of Concept (PoC) can help in Nostro account reconciliation, on March 8 positive results

A Nostro account is a bank’s foreign currency account in another bank. SWIFT initially announced in April 2017 that it was going to utilize the Hyperledger platform as a basis for updating its cross-border market payments practices in collaboration with BNY Mellon, BNP Paribas, Australia, and New Zealand Banking Group, etc.

The test project of SWIFT included 22 additional banks in July 2017 such as JPMorgan Chase Bank, Societe Generale, and Commerzbank.

SWIFT’s press release about the already published report on they bank-to-bank project indicates that the PoC aims to figure out how a combination of SWIFT assets and DLT could meet “industry-level governance, security, and data privacy requirements,” as well as show the benefits for its utilization over other applications.

Each of the 34 participating banks had their node deployed in a SWIFT DLT sandbox with the Hyperledger Fabric v1.0 as the underlying technology.

The results of PoC showed that DLT could offer the necessary functions for Nostro account reconciliation. It includes “real-time event handling, transaction status updates, full audit trails, visibility of expected and available balances, real-time simplified account entries confirmation, the identification of pending entries and potential related issues, and […] the data required to support regulatory reporting.”

SWIFT’s Head of Research and Development Damien Vanderveken mentioned in the press release:

“The PoC went extremely well, proving the fantastic progress that has been made with DLT and the Hyperledger Fabric in particular.”

To establish that the technology can support “financial multi-bank applications,” the press release also mentioned that DLT had made progress with ID frameworks, governance, and data security & confidentiality.

SWIFT’s Chief Platform Officer Stephen Gilderdale said that it is the “strategic priority” of SWIFT to look into DLT:

“We are already working on new PoCs and will continue our R&D efforts to ensure that SWIFT customers will be able to leverage their existing SWIFT infrastructure and connectivity to benefit from blockchain services, whether offered by SWIFT or by third parties, on a secure and trusted platform.”

However, the press release also notes that the financial industry could only adopt DLT on a large scale when prerequisites such as account servers migrating to real-time liquidity processing and reporting have been met.

The DLT technology will also need more development to be geared to support a more significant international infrastructure. For instance, 10,000 channels are required to cover all the existing Nostro relationships, but the study only used 528 channels.

SWIFT states that it will encourage its community to start utilizing real-time liquidity processing and reporting, as well as innovating their platform to “complement it with DLT capabilities.”