Early results from a blockchain proof-of-concept conducted by Swift with six of the co-operative’s member banks indicate that DLT application can deliver the business functionalities and data richness required to support real-time liquidity monitoring and reconciliation.
The PoC, which is based on Hyperledger Fabric v1.0 technology and has been conducted in concert with six founding banks, is part of the Swift gpi initiative to re-arm the correspondent banking system for a new age of technological disruption.
Initial findings from the tests are published in a new report that provides an overview of the PoC to date, including technical objectives, early findings on the potential business benefits, as well as key challenges that still need to be addressed to achieve industry-wide adoption.
Preliminary results of the PoC show that DLT provides real-time visibility to both the account owner and its servicer on the available and forecasted liquidity on the Nostro account and supports payment reconciliation and investigations by providing an enriched data model based on ISO 20022.
While the results are generally positive, Damien Vanderveken head of research and development, SwiftLab and user experience at Swift, cautions: “Significant progress has been made, but it is still early days for the latest generation of blockchain technology, and it will take time before it is mature and scalable enough for mission critical applications.”
Specific challenges cited include the need to develop unique value propositions in response to the different levels of sophistication, automation and past investments of banks. In particular, integration with legacy back office applications and co-existence with existing processes provides a high hurdle.
Likewise, finding a one-size-fits-all application that can be applied equally across all Swift member banks will be no easy task. For banks that have already invested heavily in automating back office reconciliations and are reaping the rewards the appetite for disruptive investment that pulls along the herd may be lacking.