Why Are Major Banks Collaborating With SWIFT?

By Rishma Banerjee

Major financial institutions like Deutsche Bank, DBS, HSBC, Standard Chartered Bank, securities software provider SLI and the Singapore Exchange (SGX) are collaborating with the global financial messaging network, the Society for Worldwide Interbank Financial Telecommunication (SWIFT), to conduct a blockchain-based shareholder e-voting proof-of-concept (PoC). This new initiative was declared by SWIFT in a press release published on March 6.

According to the press release, the PoC will be in the Asia Pacific region and is intended to figure out whether distributed ledger technology (DLT) can truly simplify the management of shareholder meetings. To be more precise, the test, that is slated to run in the first half of 2019, is meant to accomplish four main goals. Firstly, it is designed to test the deployment of a voting solution in collaboration with the issuers and a Central Securities Depository (CSD) while storing and managing data on a permissioned private blockchain. Secondly, the PoC also seeks to demonstrate the viability of hybrid solutions “combining messaging and DLT to foster interoperability and avoid market fragmentation.” SWIFT”s capacity to host third-party applications in its DLT environment and reuse its security and interface stack will also be tested and finally, the test also is looking to confirm the use of a particular financial electronic data interchange standard — ISO 20022 — in the process.

HSBC, Deutsche Bank, and the Standard Chartered Bank will be only participants, while DBS and SGX will be both participants and issuers in the initiative, which is to be facilitated by SWIFT’s DLT sandbox testing environment. Moreover, the existing SWIFT network and infrastructure will be utilized to access, test and validate the applicability of the technology.

The press release quotes a SWIFT executive as saying:

“The emergence of blockchain technology is a new opportunity to look at improving these [current] processes. It is also an opportunity for SWIFT to offer flexibility in the adoption of this new technology through the re-use of ISO 20022 based solutions together with a high level of security and resilience that our industry requires.”