SWIFT, in collaboration with leading global transaction banks, is developing a proof of concept (PoC) application that will test whether distributed ledger technology (DLT) can be used by banks to improve the reconciliation of their nostro accounts in real time, optimising their global liquidity.

Australia and New Zealand Banking Group, BNP Paribas, BNY Mellon, DBS Bank, RBC Royal Bank and Wells Fargo are among the banks participating in the PoC. These banks are working with SWIFT to identify the challenges, define the specifications, build the application and ultimately test the concept. An additional 20 banks will join the programme at a later stage to further validate and test the DLT concept. The Results of the PoC will be presented at Sibos in Toronto in October

The PoC supports SWIFT’s goal of making cross-border payments more efficient, a mission it has championed through the launch of the global payments innovation (gpi) service, which offers customers fast, transparent and traceable cross-border payments.

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

In developing the PoC, SWIFT is leveraging the recently released Hyperledger[1] Fabric v1 technology, and combining it with key SWIFT assets, to ensure that all the information related to nostro/vostro accounts is kept private and seen only by the account owner and its correspondent banking partner. The PoC application will use a private permissioned blockchain in a closed user group environment, with specific user profiles and strong data controls, and user privileges and data access will be strictly governed. The data stored on the ledger and the APIs used to query and update it will also be designed to support ISO 20022 message formats.

Damien Vanderveken, Head of R&D, SWIFTLab and UX at SWIFT, says: “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.”

Since the launch of gpi in February, twelve gpi banks are sending several hundreds of thousands cross-border payments across the globe, and over 30 additional banks started their implementation project for live operations. In total, nearly 100 banks have signed up to SWIFT gpi, representing over 75% of all cross-border payments on SWIFT.