Global banking payments network SWIFT is making plans to integrate technology from enterprise blockchain consortium R3, the CEO has revealed.
CEO Gottfried Leibbrandt disclosed this during a panel discussion at the Paris Fintech Forum which held Wednesday, January 30 that both companies were close to Proof-of-Concept (PoC) that involves R3’s technology.
“We are announcing later today a Proof-of-Concept with R3 blockchain on trade, where you can initiate a payment on the trade platform, and then it goes into GPI. So we’re exploring interconnectivity with a lot of things.”
He explained that the firm’s new GPI platform—short for Global Payment innovation—is open, very interoperable and allows links to other networks.
How R3’s blockchain technology can be applied with SWIFT
As Smartereum reported, the R3 consortium launched its open-source blockchain platform Corda earlier in the month. The platform allows members to transfer data and digital assets between themselves. So far R3 has over 300 partners including notable companies like HSBC, Amazon Web Services, Infosys, Citibank, and Intel.
Following the integration, corporates using the R3 platform will be able to authorize payments from their banks, settle payments through their bank; and receive credit confirmations via GPI, a statement on SWIFT’s website read.
According to the post, SWIFT flagship payment network, GPI will “connect multiple trade platforms to GPI members, enabling GPI payment initiation, end-to-end payment tracking, payer authentication, and credit confirmation.”
The integration of Corda network created by R3 consortium will further increase GPI reach to the trade ecosystems that have adopted the platform. David E. Rutter, CEO of R3 noted that “all the blockchain applications running on Corda will thus benefit from the fast, secure and transparent settlement provided through the SWIFT GPI banks,” adding that “SWIFT GPI has rapidly become the new standard to settle payments right across the world.”
SWIFT noted that its PoC will not be limited to R3’s Corda environment but also to other DLT and non-DLT platforms.
Centralized SWIFT Versus Decentralized Ripple
Also at the panel was Brad Garlinghouse, CEO of Ripple, blockchain-based fintech startup and a competitor to SWIFT’s global interbank network. Last year, claimed that Ripple planned to overtake SWIFT’s banking network.
He explained that SWIFT had a shortcoming in that it was centralized which made it slow and expensive compared to decentralized alternatives which offer real-time settlements.
Leibbrandt explained why SWIFT, which connects 10,000 banks and manages about $300 billion in daily cross-border payments, was reluctant to join the blockchain and cryptocurrency bandwagon. He expressed doubt over the scalability of blockchain solutions noting that most blockchain projects to date are either in-house or bilateral projects.
He also pointed to the volatility of cryptocurrencies saying it discourages institutions from settlements in cryptocurrencies. “I think that the big part of Ripple’s value proposition is the cryptocurrency XRP,” Leibbrandt said. “There we do find the banks are hesitant to convert things into a cryptocurrency right now because of the volatility in the currencies.”
Luc Meurant, SWIFT’s Chief Marketing Officer supported the firm’s approach. He noted that “while DLT-enabled trade is taking off, there is still little appetite for settlement in crypto-currencies and a pressing need for fast and safe settlement in fiat currencies.”
During the discussion, Ripple’s CEO said that he was open to a partnership with SWIFT both but neither company gave of any concrete information on any plan of a partnership.
Solomon Sunny is the market reporter for Smartereum, one of the global leaders in Ethereum, blockchain and currency news. He produces technical price updates on digital currencies and writes recent developments about blockchain.