SWIFT and Chainlink Introduce New Blockchain Integration Solutions for Banks
SWIFT, the global financial messaging service, and Chainlink, a leading provider of real-world data for blockchains, have announced their collaboration to test the integration of public and private blockchains for global banking.
This partnership aims to connect major banks and financial organizations with various blockchain networks, exploring new possibilities for efficient and secure asset transfers.
Chainlink is working with @swiftcommunity and more than a dozen major financial institutions on experiments to enable connectivity to and interoperability across public and private blockchains: https://t.co/TphsIU6A3O
These experiments are a significant step forward from the… pic.twitter.com/6UEvp22LM9
—Chainlink (@chainlink) June 6, 2023
Chainlink, a web3 infrastructure provider, will play a pivotal role in this collaboration by offering connectivity on both public and private blockchains. This means that financial institutions participating in the experiments will have the opportunity to test the compatibility and effectiveness of SWIFT’s infrastructure in facilitating the transfer of tokenized assets across various blockchain networks.
“We are excited to work with SWIFT. It is clear that as banks strive to access multiple blockchains, a common connectivity layer across the various chains will be a critical building block for their adoption of on-chain finance.” said Sergey Nazarov, co-founder of Chainlink.
However, the collaboration between SWIFT and Chainlink was first announced at Chainlink’s annual conference, SmartCon, last year.
A PROMISING FUTURE FOR THE INTEGRATION OF BANKING AND BLOCKCHAIN
By simplifying operations and settlement procedures, blockchain technology has the potential to attract more investors to private markets and improve liquidity.
Recognizing this potential, SWIFT aims to leverage the participation of major financial institutions to fuel the growth of the blockchain industry beyond the trillion dollar mark.
As blockchain networks continue to emerge, it is increasingly clear that there will not be a single predominant blockchain network. Instead, there will be multiple platforms serving different customer segments with unique capabilities and requirements.
Connecting to each of these platforms individually would be impractical for financial institutions. Therefore, the collaboration between SWIFT and Chainlink seeks to develop an interoperability model that allows seamless access to different blockchain platforms globallyproviding a much-needed solution for the highly fragmented ecosystem.
In a statement, Tom Zschach, Swift’s chief innovation officer, said that
“In such a highly fragmented ecosystem, it simply would not be feasible for financial institutions to connect to each platform individually. That’s why the community is working with Swift to develop an interoperability model that allows access to different platforms globally.”
In addition, the next experiments of the industry of SWIFT will show how their infrastructure can facilitate interoperability and ultimately, enable the transfer of tokenized value between existing systems and both public and private distributed ledger technology (DLT) platforms.
SWIFT will experiment with multiple use cases
These experiments will involve various use cases, including transfers between wallets on the same public blockchain, transfers from public blockchains to permissioned blockchains, and transfers between different public blockchains. Chainlink’s Cross-Chain Interoperability Protocol (CCIP) will ensure full interoperability between source and destination blockchains, with Chainlink serving as the enterprise abstraction layer connecting SWIFT’s network to the Ethereum Sepolia network.
Building on successful trials in 2022, our new experiments aim to show how the Swift… pic.twitter.com/izS8HDNnj8
—Swift (@swiftcommunity) June 6, 2023
In addition to the technical aspects, SWIFT’s experiments will explore the non-technological considerations that regulated institutions need to address when interacting with public blockchain networks and engaging in cross-network transactions.
As the experiments progress, the potential for increased efficiencies, reduced costs and greater liquidity in the capital markets becomes increasingly tangiblesetting the stage for significant growth in the blockchain industry.