SWIFT’s PoC to identify if DLT can help banks reconcile nostro accounts in real time

Swift along with global transaction banks is developing a new proof of concept (PoC) application to test whether or not distributed ledger technology (DLT) can be used by banks to improve their reconciliation of their nostro accounts in real time.

This new method is expected to improve the liquidity position of banks. International banks such as Australia, New Zealand Banking Group, BNP Paribas, BNY Mellon, DBS Bank, RBC Royal Bank and Well Fargo are some of the participating partners.

In the past, these banks have worked with Swift and now they are helping the company to define specifications, build the application and ultimately to test the concept.

Another 20 banks are expected to join the programme during the later stage for further validation and testing of the DLT concept. Swift plans to present the results of the PoC at Sibos in Toronto this October.

Swift claims that the new proof of concept can support its goal of making cross-border payments more efficient and much safer. The company recently launched the global payments innovation (gpi) service which provides customers with fast transparent and traceable cross-border payments.

SWIFT and SWIFT gpi Banking Markets head Wim Raymaekers, “The nostro DLT proof of concept is deeply embedded in the SWIFT gpi story of streamlining the cross-border payments system.

“It allows us to explore how this maturing technology can provide a collaborative solution to what our gpi member banks have identified as a significant pain point – nostro accounts reconciliation.”

SWIFT, SWIFTLab and UX Head of R&D Damien Vanderveken said: “We are very excited to start the DLT proof of concept with these participating banks. This is a great step forward and another example of how SWIFT and the industry can work together to solve concrete business challenges with an innovative and collaborative mindset.”

After the launch of gpi this February, about twelve banks have taken up the service and are now sending hundreds of thousands of cross-border payments across the globe. 30 more banks have started implementing the service and 100 more banks are expected to take up the service, Swift claimed.

Image: Swift developing proof of concept for banks to reconcile nostro accounts. Photo: Courtesy of jk1991/FreeDigitalPhotos.net.