SWIFT vs Ripple: India Intervened In The Financial Standoff

The confrontation of two financial platforms continues. The SWIFT Company responded to the call of the head of Ripple, who promised to seize the market of interbank transfers sooner or later, having signed the agreement with independent FinTech-developer Monetago to create a pilot project of a DLT payment system. The fact that the news came not from Brussels, where the head office of SWIFT is located but from Bombay (Mumbai) - the place where SWIFT-India is located makes the situation more interesting.

If you look at things with an unbiased eye, then there is nothing surprising in the fact that it is the Eastern branch of the global interbank network that has joined the competition with the American blockchain-company. While the West is resting on the laurels of its former economic power, India is acting: the country's economy is not just growing but is also making a noticeable prominence towards digital technologies. In the third quarter of this year, India’s GDP grew by 7.4% (this is the first place in the world!), the supply of personal computers to the market of this country increased by 21.5% to 2.7 million units in June-September. This is serious, though indirect, evidence that citizens are eager to join the digital world.

The growth of DLT in the traditional financial sector is also inspired by the growth of electronic banking transactions caused by large-scale monetary reform in India. At the end of 2016, according to the most conservative estimates, the unaccounted cash turnover reached 20% of the country's GDP. In 2017, most of the banknotes of 500 and 1000 rupees were withdrawn from circulation, which made it possible to partially remove the economy from the shadows. Today, the banks of India bring large-scale digitalization of foreign exchange
turnover: the transfer of wages to plastic cards, the development of online banking, and so on.

The step of SWIFT-India and a number of banks that supported it looks quite logical and reasonable against the background of the new monetary policy of the authorities and the involvement of people in digital reality. However, what does the leading SWIFT think about this?

At the beginning of the year, network specialists tested the DLT platform. And it was even successful, according to the head of the department for the development of distributed systems of the SWIFT research laboratory, Damien VANDERVEKEN. In the official statement on the results of the experiment, he noted: “The tests confirmed that fantastic progress had been achieved with the help of the distributed ledger technology. The DLT sandbox allowed us to control access, define and ensure users’ privileges, manage confidential data, providing it to only certain participants, and ensure the reliable operation of the identification system.”

However, the managers of a higher level have repeatedly spoken out against the development of the blockchain in the system of interbank payments. “With the help of the Ripple blockchain, interbank payments can indeed be made,” said Wim RAYMAEKERS, the head of the banking markets division at SWIFT, at a conference. - “But the exchange of personal data should be as confidential as possible. And only SWIFT can make a good job of it” At the same time, RAYMAEKERS stressed that the company had already sent requests to leading credit institutions regarding the development and use of DLT in the proceeding of payments between credit organizations, but the latter “did not express any interest”. But Indian banks are very interested.

The confrontation between SWIFT and Ripple withdrew from the technological area long ago: the global market has become the battleground for control over global financial flows. This time, India is able to show what it is made out of, and, moreover, not at the level of governments but in the corporate sector and even within the framework of the activities of subsidiaries of Western brands. The United States can impose its own Ripple on the world or, on the contrary, support SWIFT, the East will live its life and use those services that are convenient for business and consumers, and not for superpowers. By the way, India itself is aiming at this place. At least, many experts and analysts call it new China, guided not only by GDP growth but also by its policy, expressed by Chinese commander Sun Tzu, “If you sit by the river long enough, you will see the body of your enemy floating by."