The SWIFT financial system is looking to foray into the up and coming ecosystems of blockchain and tokenization. To do so, the Society for Worldwide Interbank Financial Telecommunications (SWIFT) is expanding its collaborations with international banks. The development was disclosed by Thierry Chilosi, the Chief Business Officer of SWIFT that is often referred to as a highly secure messaging service shared among high profile banking institutes to facilitate safe cross-border transactions.
As per Chilosi, financial institutes are now looking to work with assets that can carry and move value more instantly and efficiently – making financial services smoother and more modern. Chilosi was speaking to Michael Spiegel, Global Head of Transaction Banking at Standard Chartered Bank which itself is testing Web3 waters one initiative at a time.
“Digital assets are now crossing the line from controlled pilots into real-world adoption. Tokenization is no longer experimental,” Chilosi said – explaining that the blockchain integration SWIFT is exploring is essentially to bring transparency in transaction logs between financial institutions.
The fundamentals of blockchains include the storage of transactional information on smaller blocks spread across the network, rather than accumulating all the details in one place unlike traditional servers. In addition, every transaction leaves a permanent, unchangeable mark on a blockchain which adds more credibility to the logs.
Chilosi said that while SWIFT is not looking to replace existing financial systems – instead – it wishes to integrate advanced emerging technologies into traditional finance to improve its efficiency.
SWIFT acknowledges that the lack of interoperability between existing financial systems limits scale and slows down adoption. In its next phase of exploring modern financial technologies, it will work on reducing the issue of fragmentation among different kinds of payment networks.
“Swift’s role is to help the industry connect tokenized networks in the same way it connected fiat payment rails—safely, securely, and at scale. By working together, the industry can agree on settlement models, token types, and governance frameworks that work across borders. The industry can better support trade, payments and economic growth worldwide by connecting tokenized assets across networks and jurisdictions,” Chilosi concluded.
In 1973, a total of 239 banks from 15 nations joined forces to create SWIFT, headquartered in Belgium. The system presently connects over 11,500 financial institutions internationally. As per Chilosi, integrating the SWIFT network with blockchain seems like a “natural next step”.