Blockchain technology could reshape the infrastructure underpinning cross-border payments, according to Debo Sen, head of digital assets at Citi. Swift’s extensive global network could position the organization to connect traditional banking systems with emerging blockchain-based payment infrastructure.
“If anybody can pull it off, it’s Swift because of the network effect it has,” Sen said. “Swift is well-positioned. They have 11,500 banks connected to them. They understand how the banks work. The banks are familiar and comfortable.”
Swift’s role in global payments
Swift’s messaging system, which has facilitated the movement of quadrillions of dollars since its creation in 1973, does not hold or transfer customer funds directly. Instead, it sends standardized payment instructions that enable banks to debit and credit accounts, often through networks of correspondent banks.
The system facilitated an estimated $5 trillion in transfers each day, equivalent to approximately $1.2 quadrillion to $1.5 quadrillion annually, within a global payments market that McKinsey has estimated at about $2 quadrillion.
Cross-border payment processes can take between one and five business days, depending on the banks, currencies and compliance checks involved. However, the payment instruction itself may reach the destination bank much faster.
Jack Pouderoyen, head of digital asset strategy at Swift, said 75% of payment instructions arrive within 10 minutes, even though the underlying transfer of funds may take longer because of the banks, currencies and settlement systems involved.
