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SWIFT Claims 'Huge' Progress on DLT Bank Pilot
SWIFT, the interbank communications firm, has announced the results of a proof-of-concept program using DLT for bank transactions.
By Nikhilesh De
Updated Sep 13, 2021, 7:39 a.m. Published Mar 8, 2018, 5:00 a.m.
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Interbank messaging platform SWIFT has published the results of a long-running distributed ledger proof-of-concept project.
Based on Hyperledger Fabric, the SWIFT trial focused on the use of nostro accounts, or bank accounts held by banks inside other banks. The proof-of-concept envisioned these "many-to-many" bank transfers, specifically examining how the system could meet requirements around governance, security and data privacy as they relate to the nostro reconcilitation process.
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According to Damien Vanderveken, SWIFT's head of research and development, the test provided a window into the strengths – and limits – of migrating such a system to distributed technology.
He said in a statement:
"The DLT sandbox enabled us to control access, to define and enforce user privileges, to physically segregate confidential data and store it only with the relevant parties while supporting a strong identity framework by linking all participants to their BIC, and having all keys signed by a SWIFT certification authority."
"Lots of things we couldn't do before, we can do now," he later told CoinDesk. "Some things we couldn't do, but it's just a matter of time before they get fixed and we are entirely happy."
According to Vanderveken, from a technology perspective, "the progress compared to a year ago was huge and fantastic."
However, SWIFT's report also details the limitations of the transaction capacities current blockchain solutions can support, considering that, at a commercial-scale level, the system in question would need to be able to handle many more channels than the proof-of-concept demonstrated.
"If you have so many channels, then it becomes more complicated to do a number of things," Vanderveken explained.
That said, the test showed that banks could conduct real-time transactions using a distributed ledger, while staying in compliance with reporting requirements.
"It enabled real-time ... transaction status updates, full audit trails, visibility of expected and available balances, real-time simplified account entries confirmation, the identification of pending entries and potential related issues, and generated the data required to support regulatory reporting," Swift said.
Cups on a string image via Shutterstock
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