Financial messaging services provider SWIFT has launched a Proof of Concept (PoC) to explore whether distributed ledger technology (DLT) can be used by banks to improve the reconciliation of their nostro databases in real time, optimising their global liquidity.
SWIFT commented that the current correspondent banking model requires banks to monitor the funds in their overseas accounts via debit and credit updates and end-of-day statements. The maintenance and operational work involved represents a significant portion of the cost of making cross-border payments.
“This PoC will test whether distributed ledgers may be able to help banks reconcile those nostro accounts more efficiently and in real time, lowering costs and operational risk,” it added.
As part of SWIFT’s global payments innovation (gpi) initiative launched in December 2015, which seeks to deliver a new standard in cross-border payments, the new PoC was scoped in collaboration with leading correspondent banks. SWIFT gpi member banks can apply to participate in this PoC, set to launch shortly.
“Whilst existing DLTs are not currently mature enough for cross-border payments, this technology, bolstered by some additional features from SWIFT, may be interesting for the associated account reconciliation,” said Wim Raymaekers, head of banking market and SWIFT gpi at SWIFT. “This PoC gives us the opportunity to test DLT and determine if it can be applied to this particular use case.”
SWIFT will deploy open-source hyperledger technology, and combine it with key SWIFT assets to bring it in line with the financial industry’s requirements. Using a private blockchain in a closed user group environment, with specific user profiles and strong data controls, user privileges and data access will be strictly governed.
Damien Vanderveken, head of research and development (R&D), SWIFTLabs and User Experience at SWIFT, adds: “SWIFT will leverage its strong governance, public key infrastructure (PKI) security scheme, bank/business identifier code (BIC) legal identifier framework and liquidity standards expertise to deliver a distinctive DLT PoC platform for the benefit of its community.”
Since the gpi launch SWIFT reports that more than 90 banks have signed up, representing more than 75% of SWIFT’s cross-border payments traffic. “The initiative has seen tremendous industry support and is set to go live in early 2017,” it states.
ExxonMobil is legally challenging a $2m fine from the US Treasury for allegedly violating sanctions against Russia in 2014 while US Secretary of State Rex Tillerson was still overseeing the company.
Morgan Stanley is moving staff to Frankfurt in time for the March 2019 Brexit deadline.
The US bank, which already has 350 employees based in the city, will transfer some trading activities currently undertaken in London and create a further 150 to 250 jobs according to reports.
BNP Paribas is the latest in a long line of financial service companies to be penalised for misconduct during the financial crisis on both sides of the Atlantic.