Swift is enhancing its exploration into blockchain technology, as it increases collaboration with partners and institutions to drive developments in the space.
The move comes at a time when cross-border payments take on significant importance at a time of economic strain.
Tom Zschach, Chief Innovation Officer, Swift, commented: “There’s unlikely to be a single prevailing blockchain network. We would expect to see a multitude of different platforms emerging, each serving different customer segments with their own bespoke capabilities and requirements.
“In such a highly fragmented ecosystem, it would simply not be feasible for financial institutions to connect to each and every platform individually. That’s why the community is working with Swift to develop an interoperability model that would enable access to different platforms globally.”
Amid a backdrop of fuelled interest from institutional investors as they eye increasing investments in tokenized assets as they seek new forms of value — but they face a complex challenge.
These investments are tracked on a diverse range of blockchain networks that are not interoperable – each has its own functionality or liquidity profile, which creates significant overhead and friction in managing and trading the assets.
“More institutions are beginning to explore how to serve customers on both permissioned and public blockchain networks like Ethereum,” added Jonathan Ehrenfeld, Head of Securities Strategy at Swift. “This is raising questions around the key use cases and what would be required to support these activities in a secure and compliant manner.
“Our experiments will help advance the industry’s understanding about the technical and business requirements involved when interacting with and between multiple blockchain networks,” Ehrenfeld added. “They will also highlight the potential value of using a blockchain interoperability protocol to securely transfer data and value between legacy systems and a potentially unlimited number of blockchains.”
Swift’s ‘newfound focus on interoperability’ was also welcomed by Gilbert Verdian, the CEO & Founder of Quant, who emphasised how it can bolster efficiency and flexibility within payments.
Verdian stated: “The world’s largest international transaction network has now recognised that tokenization and blockchain interoperability will be key to its members. Cross-border transactions and tokenized asset settlement will indeed become much more efficient, flexible, and secure when made via blockchain and with industry standards.
“A key challenge to widespread adoption of this technology is the perception that blockchain-based transaction solutions lack the necessary levels of interoperability, scalability, and ease of implementation that are required to be truly viable for most global applications.
“We welcome SWIFT’s newfound focus on interoperability. But as it embarks on its latest experiment, we’re working on live institution-grade solutions built on Overledger, our platform that solved interoperability back in 2018.
“We also established the Blockchain ISO Standard in 2016 and the IETF Secure Asset Transfer Protocol with MIT in 2022, for industry to jointly collaborate in evolving blockchains technology.
“By connecting existing systems with any blockchain and making it simple to build business applications and issue tokens on them, Overledger makes managing and transacting interoperable tokenized assets and tokenized money a reality today for financial institutions and their market infrastructures.”