As SWIFT explains on its website, “under the current correspondent banking that. “The second phase goes one step Also, phase two of the SWIFT roadmap model, banks need to monitor the funds in further, enhancing the digital transfor- for 2018 expects to deliver extended pay- their overseas accounts via debit and mation of cross-border payments by ment data. credit updates and end-of-day statements. The maintenance and operational work enabling banks to offer new services But most important, no solution of this involved represents a significant portion such as, for example, the facility to kind addresses any of the fundamental of the cost of making cross-border pay- immediately stop and recall a payment, problems inherent in the traditional ments. This PoC will test whether distrib- no matter where it is in the correspond- infrastructure (the MT messaging stand- uted ledgers may be able to help banks ent banking chain.” ard was designed for X.25 networks in reconcile those nostro accounts more effi- Same-day settlement is better than the the 1970s). In particular, it makes no ciently and in real time, lowering costs three to five days it could currently change to the basic counterparty struc- and operational risk.” take, and it is a significant step towards ture of a traditional payment which cre- SWIFT will deploy open-source real-time (which is still not a priority ates the cost, delay and opacity in the Hyperledger technology, and combine it for most treasuries, according to first place. If you believe that new con- with key SWIFT assets to bring it in line a recent SWIFT/EuroFinance white sumer demands and the digital-first com- with the financial industry’s require- paper). Similarly, with fee transparency panies that service them are already ments. Using a private blockchain in a and predictability, GPI delivers post- stretching the capabilities of the old sys- closed user group environment with spe- transaction clarity, and this can, over tem, and that developments like the cific user profiles and strong data con- time enable treasurers to predict costs Internet of Things (IoT) will make this trols; user privileges and data access will better. But treasurers’ ultimate wish is for worse, then the GPI may well only be a be strictly governed. accurate upfront cost information. bridge to some new system of the future. The fact that SWIFT is looking at block- And the payment tracker, critical as far Further initiatives chain/DLT is a quiet acknowledgement as any corporate treasurer is concerned SWIFT understands this. As Raymaekers that the competition is doing the same, – is clearly just a step – welcome though it says, “In addition, and more broadly, and may well be stealing a march. is – along the road to a more modern sys- SWIFT is also engaging the FinTech Baby steps to the future tem. It functions as a central payments community to assess available technol- database, hosted at SWIFT, updated via ogy against customer requirements. In For example, in an attempt to remove MT199 or API with data consumption September we are hosting an ‘Industry some steps in the payment chain, and to via GUI. So each bank in the chain Challenge’ competition for FinTechs to benefit from blockchain technology, Visa updates the SWIFT database via MT199 develop overlay services leveraging the is working with Chain to develop Visa producing a set of messages that can be SWIFT GPI platform. The FinTech B2B Connect, to give financial institu- viewed by the payer via a GUI that gives winners will be awarded 100,000 EUR tions a simple, fast and secure way to pro- details of when each bank did what. By each to work with banks and SWIFT cess business-to-business payments itself this does not provide full fee trans- on collaborative innovation concepts globally via a new near real-time trans- parency or predictability and it still relies that solve additional industry chal- action system designed for the exchange upon old technology at the banks tracking lenges in cross-border payments on top of high-value international payments payments through their systems quickly of SWIFT GPI.” between participating banks on behalf of enough to produce meaningful data. their corporate clients. SWIFT’s claim that GPI will feature In addition, in January this year SWIFT’s exploration of the blockchain resulted in Chain, Inc. is a technology company that “transfer of rich payment information” is the launch of a proof of concept (PoC) – partners leading organisations to build, somewhat undercut by the fact that its scoped in collaboration with leading cor- deploy, and operate blockchain networks own documentation confirms that unal- respondent banks – to determine if and is author of the Chain Protocol, tered remittance information is limited to distributed ledger technology (DLT) which powers the Chain Core block- the 140-character standard in its messag- could help banks reconcile their nostro chain platform. Its strategic partners ing. While this could be used to deliver a databases in real time. Thirty SWIFT include Capital One, Citigroup, Fiserv, URL to a set of documents, it’s far from GPI member banks are participating in Nasdaq, Orange, and Visa. delivering full remittance information via this PoC, set to show early results at the As Visa and Chain describe it: “Visa is the bank. Again though, the improve- next Sibos meeting. Wells Fargo, Bank of working with Chain to build Visa B2B ments in information delivery are signifi- New York Mellon, ANZ, BNP Paribas, Connect using Chain Core, an enter- cant and in many cases treasurers do not DBS Bank, and RBC Royal Bank are prise blockchain infrastructure that need to key information via the banks. among those participating. facilitates financial transactions on scal- able, private blockchain networks. Build- ing on this technology, Visa B2B Connect will facilitate a consistent process to The biggest threat to SWIFT’s manage settlement through Visa’s stand- supremacy and the largest ard practices.” DLT-utilising payments In other words, this platform will cut out the majority of the correspondent bank- initiative is still Ripple. ing steps in the standard payment by allowing banks and corporates to make a payment direct to one another using the Visa infrastructure as a central clearing www.eurofinance.com TREASURY PERSPECTIVES 2017/2018 // 17