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In order to curb the growing threat of competing with the global blockchain and Fintech solutions provided by JP Morgan and Transferwise, the Society of Worldwide Interbank Financial Telecommunication (SWIFT) will be launching a pilot Global Payment Initiative service.
The program though in its nascent stage aims at building the foundation of a new integrated and interactive service that is meant to improve process efficiencies in payment transactions. The service will be available to all the 10000 banks associated with SWIFT.
One of the recent GPI tests conducted carried out instant cross-border payments with banks in China, Singapore, Thailand, and Australia met with huge success. This was equipped to enable speedy identification and eliminate errors and omissions in payment data which can be missing. There can also be an incorrect beneficiary information or an incomplete regulatory information or some related errors. SWIFT has promised on delivering a speedy and seamless transaction which will also reduce delays and costs, as well as better customer experience.
In doing so SWIFT is focusing at containing the threat of blockchain-based Fintech startups that offers services on similar lines but at a lower price. J.P.Morgan’s Internet Information Network (IIN) is one such provider. This was just launched in September but has more than 130 banks in its list of clients that include Santander and Societe Generale.
What IIN offers is minimizing hurdles in the global payments process which allows payment transfers fast, and ensures that it reaches beneficiaries faster with only a few steps to follow. The IIN has a huge membership base which is fast growing and it aims at resolving the errors and compliance issues faster by sharing information on a mutually distributed ledger.
By making use of blockchain technology, IIN reduces the time similar banks spend in responding to compliance and other data-related queries that are delaying payments. IIN is supported by Quorum which is a variant of the Ethereum blockchain, developed by J.P. Morgan. It also believes in a marked improvement in the efficiency of cross-border payments with more banks participating and evolving the functionality and the use cases beyond compliance-related inquiries.
On the other hand, the GPI used by SWIFT uses an Application Programming Interface (API) that helps banks access each other’s data to validate recipient account information before proceeding with the payment process, avoiding possible errors and delays.
A statement recently released by SWIFT contends that “Fully integrated with GPI payments, the service will facilitate real-time dynamic bank-to-bank interaction using APIs to improve the predictability and efficiency of international payments and look at using predictive analytics. It will later be complemented with a post-payment investigation and reconciliation service that will allow for fast resolution of the remaining factors, typically arising from compliance or regulatory requirements, which can slow down the payments process.”
The GPI will start operation at the beginning of 2019 initially with 15 banks that also includes JP Morgan, Barclays, Bank of China and other prominent names. The service will provide transparency in the transactions offering payment beneficiaries and the initiators a clear picture of the process from making the cost, the routes and making funds well predictable.