Twenty eight banks are now poised to test a proof of concept (PoC) Swift application for blockchain.
The purpose of the test is to ascertain whether blockchain can be efficiently used for managing international nostro accounts in real time. Nostro accounts are owned by banks that hold foreign currency in another bank.
Traditionally the reconciliation process is complex, and a bank’s positions cannot be followed in real time. This area targeted by the Swift application is a prime example of an area that blockchain could potentially streamline and revolutionise.
Detailing the benefits of blockchain when handling nostro accounts, Damien Vanderveken, head of R&D, SwiftLab and UX at Swift said: “The potential business benefits ensuing from the PoC are clear… If banks could manage their nostro account liquidity in real time, it would allow them to accurately gauge how much money is required in each account at any given point, ultimately enabling them to free up significant funds for other investments.”
Among the twenty eight banks involved in the process are Lloyds Bank, JPMorgan Chase, Standard Chartered and Deutsche Bank. This sample of the participants indicates the high profile organisations that are eager to explore the potential of blockchain.
Wim Raymaekers, head of banking markets and Swift gpi, says: “This new group of banks allows us to greatly extend the scope of multi-lateral testing of the blockchain application and thus add considerable weight to the findings. We warmly welcome the new banks and look forward to their insights.”
JPMorgan have a track record of interest in innovation, and particularly in the implementation of blockchain. For example it has been heavily involved in the major blockchain consortiums that are collaborating on the distributed ledger based technology.
Initially a structural member of the R3 blockchain consortium, JPMorgan has since left to join the fast growing Enterprise Ethereum Alliance, which includes members such as Accenture, Credit Suisse and Santander.