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- German SWIFT head Jürgen Marstatt admitted the new strategy is a reaction to pressures from Fintech, like Ripple, and even Visa
- ISO20022 could be the key to Ripple’s victory over SWIFT
Ripple and SWIFT: For many cryptocurrency enthusiasts, this is the battle between the future of cross-border payments and the “dinosaur of the stone age”. In the recent past, Ripple has already attacked its competitor several times. In May, Marcus Treacher harshly criticized SWIFT’s recent postponement of the introduction of the ISO 20020 standard and described SWIFT as disadvantageous and out of date.
Just a few days ago, the Official Monetary and Financial Institutions Forum (OMFIF), a think tank focused on central banks, unveiled a report highlighting the benefits of Ripple’s technologies as an alternative to SWIFT. However, competition from Ripple and other fintechs did not go unnoticed by SWIFT, as Jürgen Marstatt, SWIFT’s German head, recently confirmed in an interview with “DerTreasurer”.
As the website reports, SWIFT aims to be more than just a financial news transmitter in the future. Over the next two years, the network plans to “radically revamp” its cross-border infrastructure for payment processing and securities transactions, “as announced in September.
To this end, SWIFT is developing a new platform to offer “complete transaction management”. Marstatt said that with this new strategy, SWIFT “places business transactions at the heart of our offering”.
In the future, we not only want to convey the message from A to B, but to support it with additional services. To this end, we have already launched several initiatives in recent years […]. We now want to standardize and integrate these individual components on a single platform. […] The goal is to enable immediate, smooth and consistently transparent transactions. Businesses will also benefit.
Asked about competition from fintechs like Ripple and credit card provider Visa, “who want to improve payment transactions,” Marstatt admitted in the interview that the initiative is a reaction to current market developments:
Banks want to continue to conduct their payment transactions efficiently and meet the expectations of end customers. Currently there is a whole series of initiatives and cooperation between banks, fintech and, of course, SWIFT. It is therefore our task as a banking network to respond to these challenges and develop new offers. We want to support our owners in keeping up with the competition.
Cliff Jamba, Product Manager at DPS, a European consulting and software company for the financial and retail sector, commented on Marstatt’s statements as follows:
While in the past alternative payment service providers with innovative approaches were mainly overlooked by SWIFT, I see in this statement a clear reference to market realities and the needs of banks. It can also indicate that SWIFT is even more open to cooperation with other players.
However, it is unknown whether SWIFT is actually considering cooperating with fintechs such as Ripple.
Will ISO20022 be the key to Ripple’s victory over SWIFT?
As reported by CNF, in May Ripple was the first company focused on distributed ledger technology to join the ISO 20022 standards committee for cross-border payments. ISO is a de facto global data standard for modern payments and a unified standardization approach (methodology, process, repository) to enable communication and interoperability between all global financial organizations.
It is estimated that by 2023 87% of global financial transactions will be processed through ISO 20022. Membership will therefore give Ripple access to the “language” that will soon dominate all global financial communication.
Membership in ISO 20022 could therefore be crucial for Ripple, as it could also mean it can offer RippleNet on a larger scale by conforming to the same standard used by SWIFT and its member institutions. Furthermore, new customers could be easily integrated into RippleNet, as Ripple is ISO 20022 compliant, while SWIFT currently has no prospect of implementing it.
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