The global payment network Swift, one of the main guardians of the current banking model, has announced the testing of a new cross-border settlement system that could give Ripple blockchain startup a run for its money.
According to a post published by Financial Times, Swift is making a lot of progress to counter the rapid rise of Ripple and other similar blockchain payment startups.
The rise of these blockchain-based cross-border payment companies presents a direct challenge to the dominance of Swift, the world’s leading provider of secure financial messaging services. The report says Swift’s new system would minimize delays and errors on the network.
The system utilizes an Application Programming Interface (API) instead of the blockchain. API allows banks to access each other’s data to verify account info before payments. The company’s latest move is meant to shut down critics who have been accusing Swift of being expensive, slow and prone to error.
It’s worth nothing that Ripple isn’t the biggest threat to Swift’s existence. There are other Fintech startups like Revolut and TransferWise that also focus on offering cheaper, faster and better cross border settlements.
Swift has confirmed that 15 banks including J.P Morgan are taking part in the pilot program. In his own words, chief marketing officer at Swift Luc Meurant said:
“We know that there are still some payments which are badly formatted and missing some information. Instead of correcting that later in the chain and delaying payment, we are trying to anticipate as many of those issues as possible (with pre-validation) so payments can be processed faster.”
While J.P. Morgan is one of the participants of the Swift pilot program, the American banking giant is currently working on its own blockchain-based cross-border payment system dubbed “the Interbank Information Network (IIN).” The service offered by the firm has been expanded to more than 100 banks.