SWIFT (Society for Worldwide Interbank Financial Telecommunication) intends launching a Proof of Concept (PoC) to explore whether distributed ledger technology (DLT) can be used by banks to improve the reconciliation of their nostro databases in real time, optimising their global liquidity.

The organisation explains that under the current correspondent banking model, banks need to monitor the funds in their overseas accounts via debit and credit updates and end-of-day statements.

"The maintenance and operational work involved represents a significant portion of the cost of making cross-border payments. This PoC will test whether distributed ledgers may be able to help banks reconcile those nostro accounts more efficiently and in real time, lowering costs and operational risk," states SWIFT.

The new PoC is said to have been scoped in collaboration with leading correspondent banks as part of SWIFT's global payment s innovation (gpi) initiative, and is set to launch in early 2017.

SWIFT gpi was launched in December 2015 to deliver a new standard in cross-border payments. According to the organisation more than 90 banks have signed up, representing more than 75% of SWIFT's cross-border payments traffic.

"Whilst existing DLTs are not currently mature enough for cross-border payments, this technology, bolstered by some additional features from SWIFT, may be interesting for the associated account reconciliation," says Wim Raymaekers, Head of Banking Market and SWIFT gpi at SWIFT. "This PoC gives us the opportunity to test DLT and determine if it can be applied to this particular use case."

SWIFT will deploy open-source Hyperledger technology, and combine it with key SWIFT assets to bring it in line with the financial industry's requirements. Using a private blockchain in a closed user group environment, with specific user profiles and strong data controls, user privileges and data access will be strictly governed.

Damien Vanderveken, Head of R&D, SWIFTLabs and User Experience at SWIFT, adds: "SWIFT will leverage its strong governance, PKI security scheme, BIC legal identifier framework and liquidity standards expertise to deliver a distinctive DLT PoC platform for the benefit of its community."

Blockchain continues to make headlines in Africa.

Ata recent Blockchain workshop organised by Coala (Coalition of Automated Legal Applications) in Nairobi, Dr Bitange Ndemo, former Permanent Secretary for ICT and now business lecturer, said Blockchain was meant for Africa.

"We have a lot of problems ranging from corruption and fraud. We now have a technology that could alleviate some of these problems."

He added that having political will would enable the adoption and legalisation of this technology.

Marry Ann Francis, Executive Advisor and Practice Partner for Global Treasury, Payments and blockchain at Wipro Limited, said that organisation that are now starting on a Blockchain journey will have a first-mover advantage over slower-moving peers – and that scale use of blockchain is still a 35-year journey.