As the battle between Swift and Ripple heats up, we are seeing a lot of movement in the marketplace by Ripple but not so much by Swift. It looks like Swift is waking up.
The entrenched banking settlement organization, which operates the system behind the various money transfer organizations, has signed a memorandum of understanding with central securities for distributed ledger technology.
SWIFT and recent activities
The organizations have recently signed a memorandum of agreement with seven central securities depositories. The purpose of the agreement is to investigate the uses of the blockchain technology in the context of settlement and banking. A few of the aspects that they will be researching are proxy voting and other forms of post-trade processing.
Who is all involved in this agreement?
The Swift organization will be partnering with the Nasdaq organization, a settlement depository in Russia, firms in Switzerland, South Africa, Abu Dhabi, Argentina, and Chile.
The joint project will be called the CSD Working Group of DLT; the idea is to look at the current way that the market is being run and then view how the distributed ledger technology will change and improve the present processes.
Distributed ledger technology, they believe should lower costs and improve processes making aspects easier from the viewpoint of post-trade processes.
It is important to note that is action is primarily investigatory, they are primarily interested in researching the technology, they are not implementing anything at the current moment.
The representatives of the organization believe that this area needs to observed but will not be conducting any quick integrations because of the complexities that are involved. They are seeking to bring in more central securities depositories around the globe to work together on common characteristics.
What is SWIFT and what does it do?
Swift stands for Society for Worldwide Interbank Financial Telecommunications. It is a messaging network that financial institutions use to securely transmit information and instructions through a standardized system of codes.
The SWIFT system makes it easy for consumers to walk into a location and transfer money to anywhere in the world.
Many of the transfers that take place in the world happen because of the fast system and its network. The network of SWIFT acts as a messaging network; this messaging network is utilized by various banks and other institutions of the financial nature to process and safely send and accept information like instructions for money transfer. Investopedia notes that there are at least 10,000 members who are part of the SWIFT network who send around 24 million messages on the network.
Security and SWIFT
As of late, the Swift platform has faced a variety of issues due to cybersecurity attacks on its various members. Thus to make their activities safer, the organization has issued a notice that all members must comply with their security framework.
Recent cybersecurity attacks took place against several of the members of the member banks of SWIFT, specifically, Bangladesh which has experienced a loss more than 80 million dollars.
Thus, SWIFT has responded rapidly and has stated their member banks will have to implement features such as multi-factor authentication, around the clock monitoring and more.
These attacks may spur a further interest from the networking platform to implement the distributed ledger technology which has security as a critical component embedded into it.
As Ripple is seeking to cater to this banking market of settlements and more, they would also be paying close attention to the movements of SWIFT and its members.