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Swift tests show blockchain has potential for global liquidity optimisation

Swift tests show blockchain has potential for global liquidity optimisation

13 October 2017 | 5 min read

New paper highlights initial findings from proof of concept to improve real-time Nostro reconciliation, part of Swift’s gpi initiative

Brussels, 13 October 2017 - Swift has published an interim report on the proof of concept (PoC) for real-time Nostro reconciliation using a Swift-developed distributed ledger technology (DLT) sandbox with 33 global transaction banks, as part of its Swift GPI service.

The PoC is testing whether DLT can help banks reconcile Nostro accounts more efficiently and in real-time, while lowering costs and operational risk. The report 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. 

Under the current correspondent banking model, banks need 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.

Preliminary results of the PoC show that the Swift-developed DLT application can deliver the business functionalities and data richness required to support real-time liquidity monitoring and reconciliation.  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.

“The DLT PoC supports Swift’s goal of making cross-border payments more efficient – a mission we have championed through Swift GPI, which offers customers fast, transparent and traceable cross-border payments,” says Wim Raymaekers, Head of Banking Market and Swift GPI at Swift.

Swift’s DLT sandbox also demonstrated progress in DLT technology and helped identify issues that still need to be addressed to achieve industry-wide adoption. Specific challenges include the need to develop unique value propositions in response to the different levels of sophistication, automation and past investments of banks. In addition, it is crucial that integration with legacy back office applications and co-existence with existing processes is taken into account.

“Preliminary results from the DLT PoC are positive for this use case,” adds Damien Vanderveken Head of Research and Development, SwiftLab and User Experience at Swift. 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.”

Swift’s DLT PoC started in April 2017 and will conclude in November 2017, with the final results available in December.

Please click here for a copy of the interim PoC report.

Blockchain: gpi Nostro Proof of Concept - interim report

For more information about Swift GPI, please click here.

Note to the editor:
An increase in customers’ expectations and regulatory requirements related to international payments has led banks to focus on reducing transactional costs and increasing operational efficiency, whilst maintaining their competitive position. A lack of visibility and predictability on intraday in and out flows has led many banks to initiate projects to achieve real-time liquidity management. Real-time Nostro reconciliation, which requires timely matching of all movements on an account, is part of this process, providing banks with the ability to monitor intraday liquidity usage through real-time confirmation of entries on Nostro accounts, and to identify in real-time any potential issues.

About the Swift PoC interim report
Swift developed, as part of Swift’s gpi strategic roadmap, together with 33 leading banks around the world, a proof of concept where a distributed ledger is used to provide real-time visibility on Nostro accounts.  This initiative started in January 2017 and is due to end towards the end of the year.
This interim report shares information on the proof of concept, its business and technical objectives, the DLT solution developed by Swift through a collaborative approach and the testing strategy. It also provides a summary of conclusions both at business and technology levels from the testing conducted so far by the 6 banks forming the founding group.

The validation group with 27 participating banks have just started their work to further test the application and the data model. This report will be updated following completion of their testing with the consolidated feedback from the two groups and to draw the final conclusions.

About Swift
Swift is a global member owned cooperative and the world’s leading provider of secure financial messaging services. We provide our community with a platform for messaging and standards for communicating, and we offer products and services to facilitate access and integration, identification, analysis and regulatory compliance.

Our messaging platform, products and services connect more than 11,000 banking and securities organisations, market infrastructures and corporate customers in more than 200 countries and territories. While Swift does not hold funds or manage accounts on behalf of customers, we enable our global community of users to communicate securely, exchanging standardised financial messages in a reliable way, thereby supporting global and local financial flows, as well as trade and commerce all around the world.

As their trusted provider, we relentlessly pursue operational excellence; we support our community in addressing cyber threats; and we continually seek ways to lower costs, reduce risks and eliminate operational inefficiencies. Our products and services support our community’s access and integration, business intelligence, reference data and financial crime compliance needs. Swift also brings the financial community together – at global, regional and local levels – to shape market practice, define standards and debate issues of mutual interest or concern.

Headquartered in Belgium, Swift’s international governance and oversight reinforces the neutral, global character of its cooperative structure. Swift’s global office network ensures an active presence in all the major financial centres.

For more information, visit or follow us on Twitter: @swiftcommunity and LinkedIn: Swift.

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