Swift: Blockchain technology will not subvert our business model, and we are developing new technologies to deal with it

Financial infrastructure is on the verge of being disrupted by new technologies. Blockchain technology is one such contender to disrupt the financial industry as we know it. As the world’s primary money transfer protocol, Swift will ensure that it is not replaced by a distributed ledger.

The vast majority of international interbank messaging and transfers are carried out over the Swift network. While the organizations running the protocol are always keen to innovate, they do not see blockchain technology as a competitor. They acknowledge that the technology has its own merits and believe that the two ecosystems can coexist for the foreseeable future.

Blockchain technology is not a threat to Swift

In fact, Swift recently launched their proof of concept for managing the lifecycle of bond trades. They leveraged the protocol’s “own unique capabilities” rather than using distributed ledger technology. Additionally, this Swift project is in the prime position to leverage their connected networks.

Damine Vanderkerken, head of research and development at Swift Labs, told the media:

“Banks are working hard to drive research into how distributed ledger technology can be used to improve correspondent banking. We will be particularly focused on how we can leverage our significant assets and bring value to the community.”

Meanwhile, the Swift group is keeping mum on the specifics of their new initiative. Leveraging their network of banking partners is one thing, but the technology their concept will use remains very mysterious. All I know is that their product will be ‘differentiated from the distributed ledger technology currently being developed in the financial industry’.

On the other hand, it’s commendable to see Swift acknowledge that existing technology won’t necessarily be replaced. Blockchain technology can speed up the transfer of funds around the world and do so at a lower cost. However, that’s not to say that existing technology can’t offer similar capabilities. Swift looks set to use its own unique skills to outperform blockchain-based projects.

At the same time, Swift’s decision is also easy to be skeptical. In the long run, it may not be a good idea to fight against blockchain technology. Swift’s statement does not mean that they will not investigate distributed ledger technology projects. However, for now, they still believe that the usability of this technology is exaggerated.