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The Society for Worldwide Interbank Financial Telecommunication (S.W.I.F.T.) has entered into a partnership with Chainlink for a new proof-of-concept (POC) project that will help financial institutions operate across various blockchain environments.
The project was announced by Chainlink co-founder Sergey Nazarov and SWIFT strategy director Jonathan Ehrenfeld Solé at the SmartCon 2022 Conference in New York on September 28, Cointelegraph reported. Using Cross-Chain Interoperability Protocol, the POC project will enable financial institutions using SWIFT to make transactions across blockchain platforms such as crypto transfers.
“SWIFT is using the Cross-Chain Interoperability Protocol (CCIP) in an initial proof of concept,” Chainlink posted in Twitter. “CCIP will enable SWIFT messages to instruct on-chain token transfers, helping the SWIFT network become interoperable across all blockchain environments.”
Solé acknowledged that there is “undeniable interest from institutional investors into digital assets.” However, he added that traditional financial institutions prefer to access both traditional and digital assets using only one platform.
Nazarov expressed optimism that the POC project will help accelerate the adoption of blockchain or distributed ledger technology across traditional finance and capital markets. SWIFT and Chainlink’s collaboration will give traditional financial institutions blockchain capability without the need for big upfront costs or development time, according to PYMNTS.
The SWIFT interbank messaging system is the most widely used platform by banking institutions worldwide for making cross-border fiat transactions. More than 11,000 banks are connected to the network with an average of 44.8 million messages daily being coursed through the system as of August this year.
While SWIFT’s system has proven to be reliable and effective, there are areas that need improvement. The most notable disadvantage is that transactions coursed through the SWIFT network can take up to several days to complete.
This led the company to explore solutions to speed up the processing time. Aside from its partnership with Chainlink, SWIFT has been exploring the use of central bank digital currencies (CBDCs) and blockchain technology to enable faster transfers.
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