- Germany’s head of SWIFT, Jürgen Marstatt, admitted that the new strategy is a reaction to pressure from Fintechs, like Ripple, and also Visa
- ISO20022 could be the key to Ripple’s victory over SWIFT
Ripple and SWIFT – for many crypto enthusiasts, this is the battle between the future of cross-border payments and the “dinosaur from 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 antiquated.
Just a few days ago, the Official Monetary and Financial Institutions Forum (OMFIF), a think tank focused on central banks, presented a report highlighting the advantages of Ripple’s technologies as an alternative to SWIFT. However, competition from Ripple and other fintechs has not gone unnoticed by SWIFT, as Jürgen Marstatt, SWIFT’s German head, recently confirmed in an interview with “DerTreasurer”.
As the website reports, SWIFT wants to be more than a mere transmitter of financial news in the future. Over the next two years, the network plans to “fundamentally renew” its cross-border infrastructure for the processing of payments and securities transactions”, as announced in September.
To this end, SWIFT is developing a new platform to offer “comprehensive transaction management”. Marstatt stated that with this new strategy, SWIFT “puts business transactions at the center of our offering”.
In the future, we don’t just want to transmit the message from A to B, but to underpin 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 one platform. […] The aim is to enable immediate, smooth and consistently transparent transactions. Companies will also benefit from this.
Asked about the competition from fintechs such as Ripple and the credit card provider Visa, “who want to improve payment transactions”, Marstatt admitted in the interview that the initiative is a reaction to current developments in the market:
The banks want to continue to conduct their payment transactions efficiently and meet the expectations of the end customers. There is currently a whole range of initiatives and cooperation between banks, fintechs and of course SWIFT. It is therefore our task as a banking network to respond to such challenges and develop new offers. We want to support our owners in holding their own against the competition.
Cliff Jamba, Product Manager at DPS, a Europe-wide software and consulting company for the financial and retail industry, 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 may also indicate that SWIFT is even more open to cooperation with other players.
However, it is not known whether SWIFT is actually considering cooperation with fintechs like Ripple.
Will ISO20022 be the key to Ripple’s victory over SWIFT?
As CNF reported, in May Ripple was the first company focusing on distributed ledger technology to join the ISO 20022 standards committee for cross-border payments. ISO is de facto a 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. The accession will thus give Ripple access to the “language” that will soon dominate all financial communication worldwide.
Membership of ISO 20022 could therefore be crucial for Ripple, as it could also mean that it can offer RippleNet on a larger scale by conforming to the same standard used by SWIFT and its member institutions. In addition, new customers could easily be integrated into RippleNet, as Ripple complies with the ISO 20022 standard, while SWIFT currently has no prospect of implementing it.