The stage is now set. Tech companies in one corner, banks in the other and blockchain between them.

One of the most striking revelations of Facebook's Libra blockchain reveal was the fact that Facebook and a very tech-oriented conglomeration that includes some of the world's biggest names, announced that they were going all in on blockchain for payments.

And now today, less than a week later, SWIFT has released a new paper, Payments: Looking into the future, written by outgoing CEO Gottfried Leibbrant and CMO Luc Meurant, which confirms that SWIFT will be using blockchain pending a successful proof of concept with R3, and is expecting a more open model of financial services and apps within the banking ecosystem.

We now have banks in one corner and a tech giant in the other. Both corners are fighting for global payments, both corners have explicitly said that the only way anyone can compete going forwards is to use open systems, and both have explicitly said that they expect blockchain, or distributed ledger technology (DLT), to have a role to play.

In addition to the use of GPI Link to connect trade and e-commerce platforms with DLT, SWIFT has already explored nostro reconciliation with 34 GPI banks to explore how DLT could help improve liquidity, looked at shareholder e-voting through DLT.

"It's do or die in payments. The cross-border payments landscape is no different."

Do or die

"We don't think that cross-border payments challenges should be solved for with closed loop systems. Doing so would easily solve for a subset – or multiple subsets – of participants, but value needs to move everywhere – from every account, to every account. Loops create barriers and friction; they reduce fungibility and portability, they limit competition and they fragment liquidity."

"Banks know they cannot stand still. They need to adapt their own systems to support them – it’s do or die in payments. The cross-border payments landscape is no different... With goods and services moving more quickly and across greater distances than ever before, value needs to shift further, faster. From account to account, in an instant. Only a seamless and open global value transfer system can enable that."

"Pending the success of a proof of concept with the R3 trade platform, we'll also soon be enabling GPI payments on DLT-based trade platforms."

GPI (Global Payments Innovation) is SWIFT's answer to all the dust blockchain has kicked up in recent years. It's a roadmap that SWIFT foresees leading to its ultimate goal: instant, frictionless, global, 24/7 payments from any bank account to any other bank account. And now, after a range of trials, it's been found that blockchain (distributed ledger technology – DLT) could be a part of it, as the GPI Link proof of concept has proved it can be connected to trade and e-commerce platforms using DLT.

"This future is within reach. The elements are already in place, the technology is available, and the SWIFT community is progressing towards it. Key players have the ambition and commitment to realise this goal. A coalition of the willing is forging ahead with change, making the future a reality sooner than might be expected," SWIFT announces.

Open ecosystem

SWIFT also announced that it's going to be pursuing an open ecosystem, based on API technology, in which banks and fintechs can create and release their own finance-related apps for the benefit of consumers.

"Our open approach enables a vibrant ecosystem in which banks can differentiate themselves by layering services and products to distinguish their offerings; in which FinTechs and other players can create and offer value-added services; and in which innovation is fuelled," SWIFT says.

It sounds a lot like decentralised finance, in a fashion, on the bank side.

Part of this movement will be driven by the collective move towards ISO 20022, to serve as a standardised foundation on which the future can be built.

"The significance of the move to ISO 20022 cannot be overestimated. It will enable banks to channel instant payments across borders and right through domestic systems, direct to end beneficiaries' accounts. It will allow smaller markets to internationalise faster and reach wider. And it will allow larger markets to enable fluid movements across the full currency "stack" within their markets – between banks and other payment providers, card schemes, RTGS and local clearing houses," SWIFT says.

Gimmicks and circus tricks

[While] open to new technologies, we are not going to use them to perform circus tricks."

"While keeping at the cutting edge through internal R&D, we innovate and use technology for a real purpose: to improve solutions and resolve industry problems. We are transforming an existing system to offer unprecedented convenience while retaining universality and safety. This means using tested and future-proof technologies to make the journey as easy as possible for customers all around the world," SWIFT emphasises.

It views technology as a way of "facilitating, not disrupting" it emphasises.

Less than a week after Facebook and other companies give their stamp of approval to blockchain, SWIFT has done likewise on behalf of its customer banks.

Blockchain is now on both sides of the ring, along with many other developments.

Spare a thought for remittance companies, or Ripple and PayPal and other payment companies. Having third parties who simply move money through other third parties was never going to be a sustainable product. As SWIFT said, it's do or die.

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