Many blockchain-based companies have been declaring war on SWIFT, the back bone of the traditional financial sector. Ripple and Stellar are two of the major SWIFT rivals on the blockchain. Both blockchain-based companies plan to overtake SWIFT in the long run by providing faster more efficient services. However, the FinTech firm, MonetaGo, has just entered into partnership with SWIFT India to pilot a distributed ledger network that is going to improve the security and efficiency of its financial products. This is according to a press release that was published on the 20th of November.
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Keep in mind that SWIFT India is a subsidiary of SWIFT SCRL and it is made up of many international banks in India including the Bank of India and HDFC Bank. The venture offers messaging services to banks, corporations and domestic market infrastructures. According to the announcement, this program is based on the FinTech technology of MonetaGo and it will be integrated into the standard SWIFT messages.
Participating banks will deploy a shared distributed ledger network that is made up of security and data privacy requirements that meet industry standards. This will allow it improve the security and efficiency of all their financial procedures and products. The CEO of SWIFT India, Kiran Shetty, said that the company is going to make trade processes digital. At the same time, MonetaGo will offer fraud reduction or elimination solutions that will check authenticity of electronic waybills and avoid double-financing. An electronic way bill is specifically generated for the transportation of goods that are more than 50,000 rupees.
The CEO of MonetaGo Jesse Chenard had this to say about the arrangement:
“Considering the fact India is starting to focus on building a solid digital infrastructure that is supported by technological innovation and governmental policies, large institutional players will be interested in its initiatives and products”.
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The Union Cabinet of India, in September, approved an MoU on the collaborative research of blockchain technology. The aim of this MoU is to educate the public on decentralized technology and make clear definitions of how this technology can be applied to boost operational efficiency. The research was to be jointly conducted by many leading banks that have interests in building a digital economy.
In August, the central bank of India allegedly activated plans to launch a campaign aimed at understanding cryptocurrencies and the underlying blockchain technology. The central bank even created a unit that was dedicated to researching this emerging technology. The goal is to see how it can be integrated into the financial sector. Note that the central bank of India did not make any official reports regarding this matter.
This isn’t the first time SWIFT is showing interest in blockchain. In March 2018, SWIFT published a report about how a decentralized proof-of-concept can be used to reconcile Nostro accounts. The result of the PoC showed that blockchain has what it takes for Nostro account reconciliation. Regarding this issue, the head of Research and Development at SWIFT, Damien Vanderveken, said:
“The proof-of-concept was successful. It showed how efficient decentralized technology can be in fixing many problems. It also shows how much progress has been made in blockchain technology”.