The global financial messaging network, Society for Worldwide Inter-bank Financial Telecommunication (SWIFT) has announced that it will be hosting a blockchain-based shareholder e-voting proof-of-concept (PoC) with major financial institutions.
SWIFT is the conglomerate of more than 11,000 financial institutions in more than 200 countries and territories around the world that have come together to create a global financial messaging service. Since going live in 1977, SWIFT has become the primary communications channel for financial institutions engaged in correspondent banking all around the world. It offers secure, economical and reliable way of transmitting financial messages relating to payments, securities, treasury and trade using a unified platform.
In a press release SWIFT has announced that this blockchain-based project can help simplify the currently inefficient management of shareholder meetings and the associated voting processes that can not only be a complex process but also time and resource consuming. Wandering off agenda, complaining and criticizing come with the package. A bucket-load of organization’s money is spent on organizing the meetings with additional expenses on the time-off the partners have to take to attend these hours long meetings.
Blockchain can help eliminate the errors usually encountered in the process by SWIFT. For example, by using a DLT network, which records details at multiple places at the same time with no central data store or administration functionality, participants can get their own private keys that would be assigned to the transactions, acting as a personal digital signature. A feature that would ensure contribution from participants in a very short time.
Deutsche Bank, HSBC and Standard Chartered Bank will join hands with SWIFT in the project as participants, while DBS and SGX Banks will join as both participants and issuers. Testing environment will be provided by SWIFT’s DLT sandbox, which is a DLT based software testing environment that will enable the isolated execution of the project for independent evaluation, monitoring and testing.
The project is designed to accomplish four main checkpoints:
-Testing the deployment of a voting solution in collaboration with issuers and a Central Securities Depository (CSD) holding securities such as shares on private blockchain so that ownership could be transferred easily and securely at the spot.
-Demonstrating the viability of hybrid solutions based on ISO 20022, combining messaging and DLT to improve banking experience.
-Analyze SWIFT’s capacity to host third-party applications in its sandbox and reuse its security and interface stack.
-Confirming usage of ISO 20022 API’s to expose blockchain nodes, a device that contains a full copy of the transaction history of the blockchain giving parties direct access so that the participants of a system can modify/communicate through them. ISO 20022 allows for longer references, providing support for non-Latin alphabet, making it more desirable in global utility
Through these checkpoints, partners will reuse the SWIFT network and their existing SWIFT infrastructure and
interfaces to access, test and validate the applicability of Distributed Ledger Technology for improved banking experience.
The press release quotes Jeslyn Tan, Global Head of Product Management, Securities Services at Deutsche Bank, saying:
“We believe that DLT-based solutions have great potential for the securities services industry and we are proud to be collaborating with SWIFT, SLIB, SGX and key market participants on this first-of-its kind project in Singapore. Sharing best practices and working closely with market participants will allow us to create a more efficient ecosystem, which will benefit banking clients.”
SWIFT, since the bloom of blockchain, has been trying to use it as a medium for improved experience in banking. In November last year, SWIFT India and MonetoGo announced their partnership to form a Distributed Ledger Technology.
The Proof-of-Concept, a demonstration of the project’s feasibility and its practical potential, is expected to run during the first half of 2019. As obvious from collaboration among key market players, it seems that PoC has a real opportunity to revolutionize securities services which will help create a more efficient ecosystem by benefiting banking clients.