Society for Worldwide Interbank Financial Telecommunication (SWIFT) is a Belgium-based organization whose messaging network is used by over 11,000 financial institutions across the world.
SWIFT also sells software and services to financial institutions which are used on their network. While this centralized system has worked for many years now, slow transaction speeds, high fees and reported hacks have urged enterprises to explore for alternate payment networks.
This is where blockchain-based systems come into the picture. With the help of decentralized blockchain networks, financial institutions can eliminate middle-men and make direct payments, with the benefit of lower fees and instant fund clearance.
Here is the list of such blockchain networks that pose challenge to SWIFT's reign over cross-border banking payments.
Ripple is a real-time global remittance network which was created by Ripple Labs in 2012. It is a distributed open source internet protocol which supports seamless exchange of tokens representing fiat currency, cryptocurrency, commodities and any other unit of value. Ripple is based on a shared ledger, known as the XRP ledger and deploys blockchain-based consensus to process instant settlement of cross-border transactions. Major financial organizations, including some central banks, have deployed the Ripple network to make payments worth billions of dollars at a fractional cost as compared to SWIFT. Ripple's partners include Santander, American Express, Western Union, BBVA, MUFG, National Australia Bank, National Bank of Abu Dhabi, ANZ Bank, Bank of England, CommonWealth Bank, Axis Bank, and more.
IBM Blockchain World Wire was launched in September 2018 as an instant cross-border payments settlement network. It functions on the Stellar public blockchain. Leveraging Stellar protocol, it clears and settles cross-border payments in seconds without any intermediaries. All transaction data on the blockchain is simultaneously cleared with instant blockchain consensus and settles the payments on a real-time basis. As over 90 percent of the world's banking institutions are IBM customers, it is possible that banks may adopt IBM World Wire for their cross-border settlements in coming years.
Visa B2B Connect is a payments network developed by one of the biggest global payment processors - Visa. The network allows corporate clients to make cross-border payments to and from their business partners. Visa has integrated Linux Hyperledger Fabric for running this network. It is a currency agnostic system that enterprises can deploy using APIs on the private blockchain operated by Visa. Union Bank of the Philippines, US's Commerce Bank, South Korea's Shinhan Bank, Russia's Sberbank, Singapore's United Overseas Bank are involved in the pilot. Visa B2B will officially launch in the first quarter of 2019.
Corda is a global enterprise value exchange network which runs on distributed ledger technology. It was developed by New York-based company R3, along with over 200 enterprise partners in the financial technology space. Enterprise users on Corda can also deploy smart contracts, which allows parties to transact and exchange value directly.
In October 2017, 22 members of R3 launched an international payments prototype on the Corda DLT platform. Some of these banks include Barclays, BBVA, CIBC, Commerzbank, DNB, HSBC, Intesa, KBC, KB Kookmin Bank, KEB Hana Bank, Natixis, Shinhan Bank, TD Bank, U.S. Bank and Woori Bank. Corda network was also recently used by HSBC India to execute India’s first financial transaction using blockchain technology for a trade deal regarding an export by Reliance Industries to its US-based client Tricon Energy.
Interbank Information Network (IIN) is a distributed ledger system specifically created by JP Morgan for financial enterprise use in 2017. IIN is developed on top of Quorum, which is an enterprise-focused version of Ethereum public blockchain. The network of banks which have signed under IIN will facilitate global cross-border payments in every major market, including Latin America, Asia, Europe, the Middle East and Africa. Uptil now, about 75 banks across the globe have are members of IIN, including Bank of Montreal, National Bank of Canada, Societe Generale Group, ANZ, Bank of Nanjing, ICICI Bank, Nanyang Commercial Bank (China), MUFG Bank, Shinhan Bank, Woori Bank, Bank Alfalah, National Bank of Kenya, etc.
Masterchain is touted as Russian national blockchain network. As a fork of the Ethereum public blockchain, it was created by the Association of FinTech– a consortium created under the supervision of the Central Bank of Russia in collaboration with other leading banks of Russia, including VTB Bank and Sberbank. The Russian Association of Corporate Treasuries joined Masterchain in 2018 to test it within the national banking system. In addition, regulators from all the member states of the Eurasian Economic Union (Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia) have agreed on using Masterchain as a 'supranational infrastructure' to settle payments and transmit financial information.