Get ready for the launch of a faster-payments initiative from the world’s payments kingpin, SWIFT.
Founded in Belgium in 1973, the Society for Worldwide Interbank Financial Telecommunication, usually known as SWIFT, is launching a faster payments initiative next week, and SWIFT’s Innotribe startup initiative will be a big part of it.
“Our goal is that it dramatically improves the business-to-business, cross-border payments experience,” the initiative’s director, Stanley Wachs, said.
SWIFT operates in a space — international money transfers — that has faced strenuous disruption for several years. But SWIFT has been insulated from much of the disruptive innovation in international payments, because its business is largely in business-to-business transfers, rather than remittances from consumers.
“80% to 90% of the transaction value of banks is B2B,” Wachs said, underscoring SWIFT’s centrality to the space.
Innotribe, the startup competition SWIFT began in 2009, has promoted a number of companies (such as KlickEx) whose business model is a direct threat — or close complement, depending on one’s viewpoint — to SWIFT, without letting those companies inside SWIFT’s walls.
That will change in 2016.
In December, SWIFT announced its global payments innovation initiative, which includes 46 global banks. The idea is to make global payments faster, cheaper, more transparent, and more predictable. The initiative’s pilot program, which includes 20 of those 46 banks, kicks off next week.
“We will have a proof of concept done in 2016,” Wachs said, “We hope to able to show our success at Sibos.”
Sibos, SWIFT’s annual mega-conference, will be held in Geneva this year.
The pilot will explore a new set of business rules and software meant to improve the payments process. Banks that adhere to the new standard will provide faster, cheaper service, Wachs said, which could prove a differentiator.
The year 2017 will see “further adoption and engagement,” Wachs said, and a product should be available for member banks to deploy. SWIFT hopes the number of participating banks, which now numbers about 0.5% of its approximately 9,000 bank partners, will have grown significantly by then. SWIFT will also be courting large companies with the initiative. “We will want more banks and more companies to join,” Wachs said, speaking of the coming two years.
Additional improvements are planned, such as adding rich data to SWIFT messages. Initially that will be limited to tweet-length messages — 140 characters — but it will still allow for innovation, such as the addition of invoice numbers to payments. More data will be added over time, according to Wachs.
In May through Sept. 2016, SWIFT will assemble its “Vision” team, which will help develop ideas for the future including — you guessed it — blockchain technology. “Payments tracking is important and is on our roadmap,” Wachs said. “We’ll engage with fintech innovators and leverage Innotribe.”
It’s about time. The payments company D + H, which has the advantage of operating a closed payment system, announced last week that it had completed an internal pilot of blockchain technology and was looking for banks to adopt it. Blockchain will be “another rail” for D +H customers to use, said Moti Porath, executive vice president of global pre-sales. In a few years, SWIFT may be able to say the same.3 - Readers Like This Post