From a Blockchain based to a Blockchain inspired world, SWIFT could deliver verdict at Sibos

test-hand-chains

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This time last year, the dust hadn’t settled on the Blockchain hype, and several key players within Fintech and Financial Services were quite upbeat about the possibilities. However, as results of PoCs from various consortiums, central banks and payment providers emerged, the results were mixed. Daily Fintech covered an article on R3’s miseries towards the end of last year when Goldman Sachs left the consortium.

Since then, R3 publicly moved away from Blockchain, into a Blockchain inspired world using an open source distributed ledger named Corda. The R3 consortium lost three major banks towards the end of last year. This is vastly attributed to the fact that they chose to move away from a pure Blockchain implementation to a Distributed Ledger implementation for Corda.

The three banks Goldman Sachs, Santander and JP Morgan left the consortium and invested in Axoni that was a pure Blockchain firm. It got worse when R3 blogged that they were not a Blockchain firm, and had always been a distributed ledger company and got trolled on social media for that.

This was shortly followed by the news that SWIFT had launched its inter-bank payments platform that it believed would be the future of its cross border payments platform. The platform was called GPI (Global Payments Innovation), and had a founding consortium of 12 global banks. The GPI, at that time was based out of traditional technologies and not Blockchain. However, earlier this month, SWIFT announced that GPI was being beta tested on Blockchain with 22 new banks validating the system. Verdict on this PoC is going to be at Sibos later this year.

Swift GPI

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Apart from this, the Bank of England (BoE) haven’t delivered a conclusive verdict on the PoC with Ripple for Cross border payments. The detailed report on the PoC was released earlier this month. The key message was:

” Cross-border payments when applied to wholesale markets present different challenges than when compared with retail and corporate transactions, which the Ripple product is designed to handle. The availability of liquidity is one such challenge, and the PoC allowed the Bank and Ripple to begin exploring these questions. “

In other words “Ripple’s solution wasn’t fit for purpose”, although Ripple chose to see it differently.  A few days later, Ripple announced that a pure Blockchain based approach was not scalable for banks and advocated a “Hybrid approach”.

Wearing my technology hat on, I see some fundamental lessons here, and I may be repeating what has been so often mentioned.

  • Find technologies that can solve your problems – it may not have to be Blockchain.
  • Do not interchangeably use Decentralised Ledgers and Blockchains. You can photocopy on a Canon machine too (not just on Xerox).
  • Innovation doesn’t always have to be on sexy technology. SQL Server and Oracle can do the job too.
  • Simplicity is often overlooked and massively underrated.

I believe that SWIFT’s announcement of the results of their Blockchain PoC at Sibos could provide a decisive direction for Blockchain in Financial Services/Payments. And it might well be “Let’s Move On”.


Arunkumar Krishnakumar is a Fintech thought leader and an investor. 

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2 thoughts on “From a Blockchain based to a Blockchain inspired world, SWIFT could deliver verdict at Sibos

  1. Great post Arun. Having been to three SIBOS events recently, each was characterised by a different conversation related to the world of Blockchain, Bitcoin, Crypto and DLT.

    2014 Boston: (attended virtually via live streaming). “We really should have more sessions on this subject”.

    2015 Singapore: Blockchain sessions were massively oversubscribed, but it seemed disconnected from the “real” business conversations happening elsewhere.

    2016 Geneva. GPI was real, Ripple was hustling their alternative. Education was happening and it was starting to connect to real world concerns of Banks.

    It will be interesting to see how the conversation evolves this year in Toronto. I suspect it will be real decisions, commitments and implementations. It will be out of the sandbox.

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    • I would think more decisions than commitments and implementations.. I think they need a holistic technology framework either based on Blockchain ideology or with Blockchain solving a small part of the puzzle.. if they get too puristic with their Blockchain approaches, this is going nowhere!!

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