SWIFT joins hands with Consensys to power real-time blockchain-based cross-border payments

• SWIFT has announced plans to develop a blockchain-based ledger in collaboration with Consensys.
• The blockchain-based ledger will support real-time 24/7 cross-border payments while ensuring security and trust.
• The initiative will start with a Consensys-built prototype that validates transactions by enforcing rules through smart contracts.

SWIFT, the worldwide secure global messaging network used by financial institutions to transmit payment instructions, announced on Monday a strategic collaboration with the Ethereum (ETH) protocol software developer, Consensys, to develop a blockchain-based shared ledger that will power real-time, 24/7 cross-border payments.

SWIFT’s pivotal tilt toward blockchain technology 

SWIFT announced on Monday that it has initiated the groundwork, involving over 30 financial institutions globally, with the assistance of Consensys, to design and build the ledger. This initiative is primarily focused on delivering real-time, 24/7 cross-border payments.

The blockchain-based ledger will expand SWIFT’s communication into a digital environment, ensuring that banks continue to access trusted and scalable transfers of tokenized value.

SWIFT clarified that its collaboration with Consensys focuses on infrastructure, leaving the decision on which tokenized value to transfer across digital ecosystems to financial institutions and their respective central banks. Still, SWIFTY will work closely with the banks to provide support and onboarding on the new infrastructure.

The blockchain-based ledger is expected to support a secure, real-time log of transactions between banks, with key elements such as recording, sequencing, and transaction validation enforced through smart contracts.

SWIFT’s new blockchain infrastructure will strive for interoperability with existing and emerging networks. At the same time, it will not deviate from the system’s core feature of maintaining trust, resilience and compliance for the critical functioning of global finance.

“Through this initial ledger concept we are paving the way for financial institutions to take the payments experience to the next level with SWIFT’s proven and trusted platform at the centre of the industry’s digital transformation,” SWIFT CEO Javier Pérez-Tasso stated during a conference in Frankfurt.

SWIFT has handpicked financial institutions from 16 countries worldwide to test and provide feedback on the design and capabilities of the blockchain ledger. Following the proof of concept, SWIFT will expand the test to more financial institutions ahead of wider implementation.

SWIFT has been criticized for slow transitions, with cross-border payments taking time due to the involvement of multiple intermediaries. The system faces other challenges, including high costs from correspondent banks, a lack of transparency, and sometimes inefficient account reconciliation. 

The move to a blockchain-based ledger could mark a major pivot, offering faster, cheaper and more transparent cross-border payments by eliminating the need for intermediaries as processes are automated through smart contracts.