SWIFT announces new DLT project

SWIFT announces new DLT project

SWIFT is often seen one of the main middlemen that could be disrupted by the advent of blockchain or distributed ledger technology (“DLT”).  Credit Suisse called the organisation old, inflexible and slow and ripe for disruption, but the organisation is not planning to go quietly into the night.

SWIFT, in full: the Society for Worldwide Interbank Financial Telecommunication, was created in 1973 by the banks as a network to send and receive financial information in a secure and standardised way. Today it is used by over 11.000 financial institutions in over 200 countries and it is a vital part of the global financial infrastructure.   It is used to send over 25 million financial messages per day.

SWIFT has decided that the best way to prepare for the impending disruption is to become its own disruptor and it has already launched a number of DLT initiatives.  Yesterday, it announced that it has entered into a memorandum of understanding with 7 CSDs (central securities depositories) for a project focusing on how DLT could be used for corporate actions, voting and proxy voting.   Every practitioner knows that the current manner in which this is dealt with is antiquated and cumbersome and “on paper” DLT could massively improve efficiencies.  However, before anything can be “put on the blockchain” the whole financial value chain must agree on common standards and principles.  Swift has a lot of expertise in this area and it makes imminent sense for it to be involved in projects like this.   However, for the blockchain evangelists out there: these are massive undertakings which will take years of careful analysis and preparation before we might see any practical results.    In the meantime, do not count SWIFT out just yet…