Swift, the financial messaging service for the world’s biggest banks, is partnering with blockchain start-up R3.
Gottfried Leibbrandt, Swift’s chief executive, said the institution would integrate R3’s trade finance platform with its new payments standards framework GPI, or Global Payments Innovation.
“We are announcing later today a proof-of-concept with the R3 blockchain on trade where you can initiate a payment on the trade platform and then it goes into GPI,” Leibbrandt said at a CNBC-hosted panel session on Wednesday.
“We’re exploring interconnectivity with a lot of things and banks have always been a part of that interconnectivity.”
Swift touts GPI as a technology that’s able to speed up cross-border payments between banks, with end-to-end tracking of transactions in real-time.
Leibbrandt was speaking beside Brad Garlinghouse, the chief executive of Ripple, a fierce competitor to R3. The San Francisco-based start-up has made no secret of its bid to steal business from the almost five-decades-old payments processing giant.
Garlinghouse said at the panel discussion that Ripple was open to “ways we could work with Swift,” but neither company hinted at a partnership between the two in the near-term.
Swift is the irrefutable leader in cross-border payments, with more than 11,000 institutions using its platform. It moves an estimated $200 billion around the world every day.
But Swift’s platform can be expensive and slow, sometimes taking days for payments to process. Ripple’s Garlinghouse said the weakness of this model was that it’s centralized, versus a blockchain model that stresses decentralization.
“Decentralized systems I think over time are likely to win,” Garlinghouse said. “I think that today that is not what Swift is.”
Advocates of blockchain tech often point to its lack of a central authority as a key benefit when it comes to transferring funds quickly across borders. Blockchain networks are distributed across a network of computers rather than one central location.
“Swift today is a one-way messaging framework, it isn’t a liquidity provider,” Garlinghouse added. “When we think about an internet of value, it’s a mixture of two-way messaging frameworks — moving to a real-time chatting protocol if you will — coupled with real-time liquidity.”