Indian banks are in talks with global payments solution Society for Worldwide Interbank Financial Telecommunication (SWIFT) to launch a blockchain platform to prevent fraudulent transactions, Business Standard reported.
The collaborative blockchain project will benefit the banking sector especially when it has been hit by a series of big fraud incidents in the recent past, the report stated, citing experts.
It further said that if SWIFT's system was integrated with the core banking system of domestic lenders, then frauds such as the Nirav Modi one could have been avoided.
In turn, SWIFT is expected to employ the blockchain services of US-based firm MonetaGO, which recently launched the first blockchain in the country for Trade Receivables Discounting System (TReDS) or bill discounting exchanges, the report added.
SWIFT itself was earlier hit by a cyber attack where hackers had tried to burgle $100 million from the Bangladesh Central Bank just two years ago using SWIFT codes which they got access to.
“SWIFT India is committed to provide significant value to the Indian financial community through digitisation of trade. MonetaGo’s expertise in providing fraud mitigation solutions to avoid double-financing and check the authenticity of e-way Bill gave us the confidence to partner with them,” Kiran Shetty, chief executive officer of SWIFT India, was quoted as telling Business Standard.
However, San Francisco-based blockchain firm Ripple Labs has also been trying to replace SWIFT completely with its own blockchain services.
In an interview with TechCircle, Ripple India’s managing director Naveen Gupta said that 6% of transactions done on SWIFT are error-ridden, which are passed onto the customer. He claimed that Ripple’s blockchain platform operates like WhatsApp Messenger, reducing costs and errors.
"The company’s primary focus is to target the remittance market globally. What we are trying to do is provide a better and faster alternative to SWIFT, which is used worldwide by financial institutions," Gupta had said.
"We are already working with several banks globally especially in the Middle Eastern region. We also have customers in Africa and Europe who are conducting millions of transactions via our network protocol instead of using SWIFT," he added.
On the other hand, SWIFT has already partnered with 34 international banks, the Business Standard report stated.