Blockchain vs. SWIFT
SWIFT is a system of worldwide interbank financial communication channels, which has been in operation since 1973 and works with 11,000 banks and other financial institutions.
Transactions through a computer terminal go to a universal computer, are collected in a processor and processed in the operations center, after which the sender receives notification of a positive or negative result. The system is often criticized for insufficient protection of customer data, and it takes up to 5 days to process payments.
Transactions in blockchain networks are much faster and cheaper, and in recent years, SWIFT began to have competitors. One of the first competitors was the blockchain platform Ripple, created especially for the banking sector. Its operating principle is similar to that of SWIFT, the main difference being decentralization. Over several years, more than 200 financial institutions used the company’s products.
But SWIFT offered its own solution: a few years ago, the company introduced GPI (Global Payments Innovation), a cloud computing system enabling corporate bank clients to make and track payments more quickly. In response, Ripple CEO Brad Garlinghouse said it was like a car versus horse and cart race. If the servers with the GPI software are shut down, the GPI will become unavailable, and Ripple will continue to operate as long as at least one of the many servers supports it.
However, GPI development continues, and the system is trying to fix basic problems. In the summer of 2019, SWIFT once again tested cross-border payments.
The GPI Instant test with Singapore’s internal FAST instant payment system, which involved seventeen banks from seven countries, resulted in an average speed of 25 seconds. The best result was only 13 seconds.
GPI Instant’s main launch is scheduled for the end of 2019. With such transaction speeds, it is obvious that this system can compete with blockchain networks.