Trend! SWIFT will definitely be replaced by blockchain technology

Sometimes it’s hard to understand why financial institutions know so little about blockchain technology. While blockchain is not a panacea for financial institutions, it’s close. Of course, SWIFT is not the answer.

A recent article on the American Banker website raised the topic of blockchain technology replacing the old settlement and communication technology SWIFT. Apparently, the mere mention of this topic has shocked bankers. The topic of "blockchain replacing SWIFT" is indeed interesting.

First, let us understand what SWIFT is?

SWIFT is the abbreviation of Society for Worldwide Interbank Financial Telecommunications. It is a communication network for financial institutions to exchange information and instructions securely using a standard code system.

So is this system that has caused a stir on the American banker network just an encrypted communication system that uses a string of codes to identify the communication partner? The answer is yes.

Investopedia states:

“It’s important to understand that even a system as powerful as SWIFT is just a communications system. It doesn’t hold any money or securities and it doesn’t manage customer accounts.”

To be honest, when I first read this article, I was a little confused. There seemed to be a big gap between the author, his readers, and the meaning of the article. Once these emotions calmed down, I began to think about the deeper meaning of the article.

We are so casual about the technology, we talk about Slock’s functionality, public and private ledgers or “hard forks”. The value chain of blockchain technology for the greater financial world, and banks in particular, is not self-evident. We can think about the SWIFT system for a moment. How can this be a topic, right? It seems that blockchain can not only replace SWIFT, but also increase the security, speed and accuracy of the system. However, bankers are obviously disturbed by the article about the possibility of SWIFT being replaced in the future.

People don’t respond well to the unknown. Especially in a financial system where knowledge of ownership and information paths is crucial. We live in an era where the clichés and secretive boys’ clubs have become transparent. The glory days of SWIFT bringing added value to banks just 20 years ago have long since faded.

Technology is coming down from the dark side, sweeping the dust off its shelf. Technological innovation has always moved in a linear fashion, leaving little room for confusion. Consumers are beginning to understand that obscure financial industry jargon is used to justify extra fee structures. Now we are about to see the end of these extra fees. Platforms like Legal Zoom make it harder to charge $550 per hour for a lawyer’s consultation.

Take a moment to read this article and you will know why blockchain technology is impacting the financial industry. Even the best technology is useless without an audience.