The Swift payment network is reinventing itself with Ethereum: the project that could change banking.

SWIFT is collaborating with global banks to test the migration of its payment system to the Ethereum blockchain using the Layer 2 Linea network.

According to Grégory Raymond, co-founder of The Big Whale, SWIFT, the traditional platform that coordinates interbank payments worldwide, is in the process of evaluating its migration to blockchain technology. 

In collaboration with more than a dozen international banks, including BNP Paribas and BNY Mellon, The organization explores Linea's capacity, a Layer 2 network built on Ethereum by Consensys, to offer a new approach to payment messaging. 

According to the report, this experiment seeks to optimize efficiency and reduce costs in a system that has traditionally relied on multiple intermediaries for transactions.

SWIFT explores the potential of blockchain amid the need for technological modernization

For decades, SWIFT has operated as the centralized system that allows thousands of financial institutions around the world to send secure payment instructions. Its importance lies in the coordination of transfers that can cross borders and currencies, ensuring the correct processing of international payments. 

However, this process involves a complex network of intermediaries, which can translate into long settlement times and additional costs in commissions and processing. These limitations have encouraged the search for new technologies that offer agility and transparency without sacrificing security or increasing costs.

In this sense, the tecnología blockchain appears as a viable alternative. Its ability to record information immutably and in real time, along with protocols that allow confirm transactions quickly, represents an opportunity to transform traditional financial infrastructure. 

For SWIFT, the the implementation of blockchain in payment messaging could translate into a more efficient system and less dependent on intermediaries external, maintaining the security approved until now, but with a greater speed of execution and lower operating costs.

Testing the privacy and speed of Ethereum's Linea network

The commitment to Ethereum, and specifically to Layer 2 Linea, is no coincidence. Although Ethereum is the leading smart contract platform in the blockchain ecosystem, this network has experienced challenges in terms of scalability and transaction costs, which Layer 2 Linea seeks to overcome. 

Overall, Linea has the ability to process transactions faster and more cost-effectively than on the mainnet, while maintaining the security and transparency inherent to the Ethereum network.

Currently, SWIFT and the banks involved have initiated pilots integrating their messaging systems with this Layer 2 network, with the intention of validating the technological migration of their messaging systems. According to Raymond, a notable feature of Linea is the emphasis on privacy through advanced cryptographic testing, a quality highly valued by financial institutions like SWIFT that must balance innovation with strict regulations and confidentiality standards.

On the other hand, though the pilots are already underwayThe use of stablecoins or tokens for actual payment processing remains in its theoretical stages. Experimentation is currently focused on direct on-chain messaging, exploring how Ethereum's Layer 2 technology can provide real efficiency in the speed and costs of international settlement.

“Today, SWIFT is a secure messaging network that transmits payment instructions between more than 11.000 financial institutions. But it remains cumbersome, dependent on multiple intermediaries, and centralized. 

“This is where blockchain could be a game changer.”, Raymond pointed out in his post on X. 

The future of international payments is on blockchain.

SWIFT's initiative highlights the growing interest in traditional banking in adapting to blockchain technology without abandoning their core infrastructure. The combination of SWIFT and the Ethereum blockchain could foster a more connected and efficient global financial industry. 

By reducing dependence on intermediaries and accelerating the transmission of payment instructions, with lower costs and greater efficiency, possibilities are opened for democratize access and optimize operations in international markets, benefiting both banks and companies and end users.

Furthermore, privacy and regulatory compliance, with cryptographic proof mechanisms, demonstrate that it is possible to implement technological innovations while maintaining strict controls. Overall, this approach can facilitate the adoption of decentralized technologies and increase trust among financial institutions worldwide.

Although still in its early stages of development, this technological project anticipates an orderly transition where traditional banking incorporates the advantages of blockchain into its payment communication processes. The progress of SWIFT's pilots will set key guidelines for the next generation of interbank systems, which aspire to be more agile, secure, and cost-effective.