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SWIFT: blockchain tests show potential for global liquidity optimisation

First Published 16th October 2017

New paper highlights initial findings from proof of concept to improve real-time Nostro reconciliation, part of SWIFT's gpi initiative

Brussels - SWIFT has published an interim report on the proof of concept (PoC) for real-time Nostro reconciliation using a SWIFT-developed distributed ledger technology (DLT) sandbox with 33 transaction banks, as part of its SWIFT gpi service.

The PoC is testing whether DLT can help banks reconcile Nostro accounts more efficiently and in real-time, while lowering costs and operational risk.The report provides an overview of the PoC to date, including technical objectives, early findings on the potential business benefits, as well as key challenges that still need to be addressed to achieve industry-wide adoption.

Under the current correspondent banking model, banks need to monitor the funds in their overseas accounts via debit and credit updates and end-of-day statements. The maintenance and operational work involved represents a significant portion of the cost of making cross-border payments.

Preliminary results of the PoC indicate that the SWIFT-developed DLT application can deliver the business and data functionalities required to support real-time liquidity monitoring and reconciliation. DLT provides real-time visibility to both the account owner and its servicer on the available and forecasted liquidity on the Nostro account and supports payment reconciliation and investigations by providing a data model based on ISO 20022.

SWIFT's DLT sandbox also demonstrated progress in DLT technology and helped identify issues that still need to be addressed to achieve industry-wide adoption. Specific challenges include the need to develop unique value propositions in response to the different levels of sophistication, automation and past investments of banks. In addition, it is crucial that integration with legacy back office applications and co-existence with existing processes is taken into account.

SWIFT's DLT PoC started in April 2017 and will conclude in November 2017, with the final results available in December.

Please click here for a copy of the interim PoC report.