“SWIFT isn’t a competitor to IBM Blockchain World Wide any more than the telegraph was a competitor to the telephone,” Andrew Munro wrote boldly on finder.com- an online news portal that reports everything under the sun.
However, the truth is SWIFT did not sit still in the face competition. SWIFT, a long-standing inter-bank communication system, realised that the underlying business process causes frictions and deter the banking system to fully achieve instantaneous cross-border transfer.
Race to be the fastest
In 2018, SWIFT has successfully trialled instant cross-border payment with gpi. According to a press release by SWIFT, the fastest SWIFT gpi payment in the trial was sent from China, reaching the end beneficiary account in Australia via NPP in 18 seconds. In the past, it takes at least two days to complete a cross-border transaction, but with the new system involve consumers can expect more linkage between cross-border services with domestic real-time networks across the Asia Pacific Region. The new system has gained support from over 300 financial institutions around the world and accounts for 55% of SWIFT’s cross-border traffic.
Who provides the safest network?
As the technology evolves, the cyber-attacks have also become increasingly sophisticated.
Michael Moon, Head of Asia Pacific Payments Markets from SWIFT told Block Asia:
“The proliferation of instant payments has led to new emphasis on cyber intrusion. These attacks are falling into two general areas – sending high-value fraudulent payments in less developed countries and ‘softer target’ financial institutions; and targeting customer data for ransom. Along with this, there is a shift in the pattern that attacks are taking place in. Hackers are starting to collaborate with one another, and attacks are happening more frequently during operating hours, and in lower values, in a bid to avoid detection.”
In response, SWIFT has introduced intelligent anti-fraud services to combat cybercrimes.
One such service is SWIFT’s Payment Controls, an in-network solution that helps payment operations teams mitigate fraud risk in real-time through its unique alerting and reporting capabilities. The service may be set to flag, hold, release or reject high-risk or uncharacteristic payments in real-time, according to business needs. On top of that, SWIFT’s Stop and Recall function for gpi enable banks to immediately stop and recall a payment anywhere in the chain, providing another barrier against fraud.
Another approach is SWIFT’s Customer Security Program (CSP) enhances SWIFT-related tools for customers and provides a customer security control framework, while also sharing best practices for fraud detection and improving support by third-party providers.
Ripple and Stellar, on the other hand, use blockchain technology to encrypt the information exchanged between banks and offer transparency in the process.
However, Jesse Lund, IBM’s vice-president of blockchain told Fortune that the use of digital currency might be temporary. Once central banks begin issuing digital currencies of their own – perhaps in the form of USCs- this will become an integral part of the blockchain-based money transfers.
Blockchain Technology has proven its usefulness in cross-border payment but the scuffle to dominate the cross-border payment market has just begun.
Sources and Image Credits: SWIFT, Financial Times, finder.com