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I’ve got standards – which one do you want? [UPDATE 5 APRIL 2016]

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Like a few other guys, I fly around the world almost non-stop. When people ask me where I live, I say British Airways lounge, and George Clooney’s Up in the Air looks like a novice to me.   Yet, even with all of that experience, you now and again encounter an anomaly.  China for example.  What about China for example?  Well, China for example, is the only country I’ve visited anywhere that doesn’t like my iPhone charger.  It’s the only country in the world that actually takes my charger from my carry-on case and bins it.  That’s annoying, especially when you have one of the world’s best iPhone chargers, so the next time I went to China, I put the charger in my hold luggage.  Nah.  I just flew through China again and they dipped into my hold luggage, took the charger and binned it.  You are not allowed any lithium battery products in any Chinese airport in your carry-on or hold luggage.

So why am I sharing this story?

Because this is at the heart of banking and the blockchain.

A century ago, countries implemented different standards for most things.  Our electricity, roads, governments, taxes, benefits, languages and more are all different.  One of the harmonising things of the internet age is that things are all becoming standardised globally.  The language of the internet is English; the challenge of governments is to work out how to tax the internet; WiFi and web usage is becoming normalised everywhere, as demonstrated by the fact that Facebook recently surged through a billion people using the service at the same time.

Internet inclusion is leading to standardisation and harmonisation, whether we like it or not.  But it’s not there yet.  A global platform will probably take another generation to generate and, in the meantime, we will live with the anomalies.  The problem is that anomalies cost.

You want standards?  No problem, we have many.  Which one do you want?

This is the issue, and is the reason why banks talk about interoperability and standardisation at all the conferences I attend.  ISO20022, XML, SEPA, XS2A, TARGET2 and T2S and more are all driving for common architectures and infrastructures, to lower cost and improve straight through processing.

Now we stand on the cusp of a new world.  An open source world of finance where our infrastructures can be rearchitected to work as shared distributed ledgers in a global network via blockchain.  But there’s an issue, and I often raise it.  The issue is that we cannot create shared distributed ledgers if some of the players won’t share it.

A global clearing and settlement system via Digital Asset Holdings is fine, but there are others trying to create a global clearing and settlement system such as SETL, Epiphyte, Clearmatics, Overstock and more.  Who will win?  Will there be a shared global clearing and settlement system or, more likely, several variations that suit different geographies and lines of business.

There is no such thing as a bank blockchain if the chain is only shared by a small group of players.  There is something that does lend itself towards global standardisation in banking however, which is SWIFT.  SWIFT has forced standards in the past – I always remember the bitching and moaning when they forced everyone to upgrade to  SWIFTNet a decade ago – and may have to do so again.

In December, intriguingly, SWIFT joined the Global Payments Innovation Initiative with the Linux Foundation.  If you missed the announcement:

The Linux Foundation, the nonprofit organization enabling mass innovation through open source, today announced a new collaborative effort to advance the popular blockchain technology. The project will develop an enterprise grade, open source distributed ledger framework and free developers to focus on building robust, industry-specific applications, platforms and hardware systems to support business transactions.

Early commitments to this work come from Accenture, ANZ Bank, Cisco, CLS, Credits, Deutsche Börse, Digital Asset Holdings, DTCC, Fujitsu Limited, IC3, IBM, Intel, J.P. Morgan, London Stock Exchange Group, Mitsubishi UFJ Financial Group (MUFG), R3, State Street, SWIFT, VMware and Wells Fargo.

No sight of anything out of it yet, but with SWIFT on board it could make things happen.  As C24's CEO Craig Beddis stated in his blog about the subject: Blockchain needs SWIFT as much as SWIFT needs blockchain.

That may be true or maybe it’s not.  Blockchain is gaining traction with our without SWIFT.  The earlier mentioned Digital Asset Holdings (DAH) has pretty impressive backing between alliances with alliances with Accenture, PwC and Broadridge; early trials with JP Morgan and the Australian Stock Exchange; and backing from ABN AMRO, Accenture, ASX Limited, BNP Paribas, Broadridge Financial Solutions, Inc., Citi, CME Ventures, Deutsche Börse Group, ICAP, J.P. Morgan, Santander InnoVentures, The Depository Trust & Clearing Corporation (DTCC) and The PNC Financial Services Group, Inc.

Equally, the R3CEV consortia could challenge SWIFT, as 42 of the world’s largest banks* back the initiative which has early trials using Erethreum to build the next generation payments system.

The trouble is that as we see these burgeoning interests in developing bank blockchain standards, we are potentially going down the same route as the Chinese lithium battery ban.

You want standards?  No problem, we have many.  Which one do you want?

I hope that in a year or two, we can see a different landscape where SWIFT works in partnership with DAH and R3 to create true interoperability and standardisation via databases that are shared by all banks that need to share them.


* The 42 banks onboard with R3CEV are:

  1. Banco Santander
  2. Bank of America
  3. Barclays
  4. BBVA
  5. BMO Financial Group
  6. BNP Paribas
  7. BNY Mellon
  8. Canadian Imperial Bank of Commerce
  9. Citi
  10. Commerzbank
  11. Commonwealth Bank of Australia
  12. Credit Suisse
  13. Danske Bank
  14. Deutsche Bank
  15. Goldman Sachs
  16. HSBC
  17. ING
  18. Intesa Sanpaolo
  19. P. Morgan
  20. Macquarie Group
  21. Mitsubishi UFJ Financial Group
  22. Mizuho Bank
  23. Morgan Stanley
  24. National Australia Bank
  25. Natixis
  26. Nomura
  27. Nordea
  28. Northern Trust
  29. OP Financial Group
  30. Royal Bank of Canada
  31. Royal Bank of Scotland
  32. Scotiabank
  33. Skandinaviska Enskilda Banken
  34. Société Générale
  35. State Street
  36. Sumitomo Mitsui Banking Corporation
  37. Toronto-Dominion Bank
  38. S. Bancorp
  39. UBS
  40. UniCredit
  41. Wells Fargo
  42. Westpac Banking Corporation


UPDATE 5th April 2016


SWIFT kicks off pilot for global payments innovation initiative


21 banks piloting SWIFT’s new initiative to improve cross-border payments

Brussels, 5 April 2016 – SWIFT announces today that 21 banks have started the pilot for its global payments innovation initiative, intended to improve the customer experience in correspondent banking by increasing the speed, transparency and predictability of cross-border payments.

The pilot is planned to run through to December, the first results of which will be shared at Sibos 2016 in Geneva this September. The banks participating in the pilot include: ANZ, Bank of America Merrill Lynch, Bank of China, Bank of New York Mellon, Bank of Tokyo-Mitsubishi UFJ, Barclays, BNP Paribas, Citi, Danske Bank, DBS, ICBC, ING Bank, Intesa Sanpaolo, JPMorgan Chase, Mizuho, Nordea, Royal Bank of Canada, SMBC, Standard Chartered, UniCredit, and Wells Fargo.

Wim Raymaekers, Global Head of the Banking Market and project lead for this initiative at SWIFT says, “The tight knit group of leading banks will help to spearhead the testing through the pilot and beyond. Their commitment is testament to the initiative and our joint ambition to significantly improve the cross-border payments experience for corporate customers. As we progress, we aim to incorporate additional innovations and deploy new technologies to this global payments innovation initiative, and define additional service level agreements that will cater for other client groups, further reducing the costs and frictions arising from compliance, liquidity and processing efficiency considerations involved in cross-border payments.”

Following our earlier announcement in January 2016, 51 banks are now signed up to the initiative to work together to create a new service level agreement (SLA) rulebook for cross-border payments, providing an opportunity for smart collaboration between banks. The banks that have recently joined the initiative are Standard Bank, Investec, Resona Bank, Tadhamon International Islamic Bank, Kasikornbank, and the Bank of the Philippine Islands (BPI).

In response to requests from the banks, SWIFT is offering an on-boarding process in parallel to the pilot, to ensure that all banks signed up for the initiative can prepare for live operations. The service is planned to go live for all participating banks in 2017.

In its first phase, the new service will focus on business-to-business payments. Designed to help corporates grow their international business, improve supplier relationships, and achieve greater treasury efficiencies; the initiative will enable corporates to receive an enhanced payments service directly from their banks, with the following key features:

  • Same day use of funds
  • Transparency and predictability of fees
  • End-to-end payments tracking
  • Transfer of rich payment information.

“This is a smart way to address some major pain points with the current cross-border payments process,” says Magnus Carlsson, Treasury and Payments Manager at the Association for Financial Professionals (AFP). “Through the global payments innovation initiative, banks can use existing technology to quickly bring visible improvements to B2B payments for their corporate customers. From a corporate perspective this kind of development in the payments space is very encouraging as it means no significant changes need to be made to internal systems in order to potentially reap the benefits of the program.”

Chris Skinner Author Avatar

Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog,, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...

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