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How does SWIFT play with ISO20022, is that the same thing but different message format? Also I get it that SWIFT filled a need in the olden days, but with inte

How does SWIFT play with ISO20022, is that the same thing but different message format? Also I get it that SWIFT filled a need in the olden days, but with internet+messaging systems in general now available ww why don't banks use something more modern and less expensive? I am not hinting at blockchain. Eg they could use sth like email, telegram, some private incarnation of that, to send their MTx messages, or whatever.

atdrummond 5y ago
Let me answer your second question - the recent implementation of SWIFT gpi (which is not being widely used by most Russian institutions so not relevant to the sanctions talk) is designed to increase the power of the SWIFT system, better automate payments and ease interaction between SWIFT and clearing houses/payment systems. So in that sense it would be far better than coordinating over a non-payments specific communication method. Regarding your first question - ISO20022 currently requires a parser to convert ISO20022 information into a MT message. This is automated in SWIFT gpi and compatible softwares.
rvz 5y ago
> Also I get it that SWIFT filled a need in the olden days, but with internet+messaging systems in general now available ww why don't banks use something more modern and less expensive? I am not hinting at blockchain. Well, I won't be surprised to see blockchains like XRPL, Stellar and Algorand to be part of the ISO 20022 standard [0] [0] https://finance.yahoo.com/news/iso-20022-cryptos-5-compliant-194204661.html https://finance.yahoo.com/news/iso-20022-cryptos-5-compliant...
- elric 5y ago
  Given that ISO20022 (MX) contains thousands of message types already, it certainly wouldn't be surprising to see a few more appear. In addition to that, SWIFT has something called MyStandards, which basically enables financial institutions to create/share/use their own message formats. Insert XKCD-927.
gruturo 5y ago
> How does SWIFT play with ISO20022, is that the same thing but different message format? The "legacy" SWIFT standard , called MT, was (retroactively) made into an ISO standard itself - ISO15022. Currently it is expected to coexist with ISO20022 on the same SWIFT network for 5 years, no idea which % of traffic is MT and which is ISO20022 though. So anyway - The SWIFT network can carry either traffic. As to why the SWIFT is not replaced.... it's not _that_ expensive, if you're a bank, and there is a huge network effect: If all your friends (other banks) are on network X, you really want to be there too, even if you maybe don't like too much how it's run and its cost. Additionally, it provides a lot of convenience which would be really painful to reimplement - and it would be massively antieconomic to implement it unless you can spread the cost over as many participants as possible (so you're basically trying to create another SWIFT - and there are already plenty of alternatives, though none with the reach and trust SWIFT offers). Said convenience is, for example, delivery confirmations, ability to replay any message up to 2 months ago, guarantee of every participant (bank)'s identity, non-repudiation. Oh and extreme resilience, which doesn't hurt. But this misses the main value proposition, which I perceive as the trust in the institution: they've been doing exactly this job for longer than I've been alive, they're a neutral operator, simply carrying everybody's traffic and being truthful about what passes through their pipes. If you send a message through SWIFT, you won't be able to deny that, and the banking community will consider you committed to what you wrote. If you denied that you did, SWIFT would be able to replay the message (even without your consent, if coerced by authorities). And they will not agree to "lose" a message you regret sending - their entire value to the banking community would go to 0 in a moment. Finally, they're a cooperative - participating banks actually own a stake, and profits just get redistributed (more or less), so it's not like they are sucking an inordinate amount of money away from the banking system and keeping it to themselves.
- atdrummond 5y ago
  Most of the institutions doing a good job with 20022 anyway have jumped to gpi which handles it out of the box. I'd say we see about half and half but we work with a lot of smaller institutions that aren't on GPI and aren't particularly sophisticated.
- miraculixx 5y ago
rowls66 5y ago
SWIFT transitioned from X.25 to IP ~ 10 years ago, so they have made changes to keep up with technology. The SWIFT network is now a private IP network. Given the value of transactions that move across the SWIFT network daily, I think that many participants feel more comfortable with the added security that comes with a private network.

atdrummond 5y ago

Let me answer your second question - the recent implementation of SWIFT gpi (which is not being widely used by most Russian institutions so not relevant to the sanctions talk) is designed to increase the power of the SWIFT system, better automate payments and ease interaction between SWIFT and clearing houses/payment systems. So in that sense it would be far better than coordinating over a non-payments specific communication method. Regarding your first question - ISO20022 currently requires a parser to convert ISO20022 information into a MT message. This is automated in SWIFT gpi and compatible softwares.

rvz 5y ago

> Also I get it that SWIFT filled a need in the olden days, but with internet+messaging systems in general now available ww why don't banks use something more modern and less expensive? I am not hinting at blockchain. Well, I won't be surprised to see blockchains like XRPL, Stellar and Algorand to be part of the ISO 20022 standard [0] [0] https://finance.yahoo.com/news/iso-20022-cryptos-5-compliant-194204661.html https://finance.yahoo.com/news/iso-20022-cryptos-5-compliant...

elric 5y ago
Given that ISO20022 (MX) contains thousands of message types already, it certainly wouldn't be surprising to see a few more appear. In addition to that, SWIFT has something called MyStandards, which basically enables financial institutions to create/share/use their own message formats. Insert XKCD-927.

gruturo 5y ago

> How does SWIFT play with ISO20022, is that the same thing but different message format? The "legacy" SWIFT standard , called MT, was (retroactively) made into an ISO standard itself - ISO15022. Currently it is expected to coexist with ISO20022 on the same SWIFT network for 5 years, no idea which % of traffic is MT and which is ISO20022 though. So anyway - The SWIFT network can carry either traffic. As to why the SWIFT is not replaced.... it's not _that_ expensive, if you're a bank, and there is a huge network effect: If all your friends (other banks) are on network X, you really want to be there too, even if you maybe don't like too much how it's run and its cost. Additionally, it provides a lot of convenience which would be really painful to reimplement - and it would be massively antieconomic to implement it unless you can spread the cost over as many participants as possible (so you're basically trying to create another SWIFT - and there are already plenty of alternatives, though none with the reach and trust SWIFT offers). Said convenience is, for example, delivery confirmations, ability to replay any message up to 2 months ago, guarantee of every participant (bank)'s identity, non-repudiation. Oh and extreme resilience, which doesn't hurt. But this misses the main value proposition, which I perceive as the trust in the institution: they've been doing exactly this job for longer than I've been alive, they're a neutral operator, simply carrying everybody's traffic and being truthful about what passes through their pipes. If you send a message through SWIFT, you won't be able to deny that, and the banking community will consider you committed to what you wrote. If you denied that you did, SWIFT would be able to replay the message (even without your consent, if coerced by authorities). And they will not agree to "lose" a message you regret sending - their entire value to the banking community would go to 0 in a moment. Finally, they're a cooperative - participating banks actually own a stake, and profits just get redistributed (more or less), so it's not like they are sucking an inordinate amount of money away from the banking system and keeping it to themselves.

atdrummond 5y ago
Most of the institutions doing a good job with 20022 anyway have jumped to gpi which handles it out of the box. I'd say we see about half and half but we work with a lot of smaller institutions that aren't on GPI and aren't particularly sophisticated.
miraculixx 5y ago

rowls66 5y ago

SWIFT transitioned from X.25 to IP ~ 10 years ago, so they have made changes to keep up with technology. The SWIFT network is now a private IP network. Given the value of transactions that move across the SWIFT network daily, I think that many participants feel more comfortable with the added security that comes with a private network.