Many a well-funded fintech upstart has burst onto the scene with the intention of challenging the dominance of the Swift (Society for Worldwide Interbank Financial Telecommunication) payments network. The Belgium-based interbank messaging network is and continues to be a convenient poster child for the woes of traditional correspondent banking.
Yet disrupting the organization has proven, thus far, much harder than firms like Airwallex, Revolut, Wise, Rapyd, and dozens of blockchain-based payment infrastructure providers made it out to be. Swift continues to boast an unparalleled network effect and deep entrenchment in financial infrastructure built up over five decades. Swift connects more than 11,500 institutions in 200+ countries, acting as the secure plumbing of international finance.
That’s not to say the organization is immune to competitive pressure. On the contrary, the advent of gpi was partially a response to pressure from fintech upstarts who promised faster, cheaper, and more transparent global payments. But because of Swift’s foundational nature, its fintech challengers often decide to abide by that old proverb, “If you can’t beat ‘em, join ‘em.”
Setting the New Cross-Border Payments Standard
Many of the criticisms of Swift and traditional correspondent banking have been addressed by gpi, which is now nine years old. While fintech disruptors still called for a payments revolution, inherently cautious, conservative financial institutions preferred the evolutionary approach of gpi, which modernized traditional correspondent banking instead of replacing the system.
Correspondent banking used to be painfully slow. Today, that is less true. Nearly 60% of gpi payments reach the beneficiary bank within 30 minutes. Almost 100% are credited within 24 hours.
Gpi also introduced a Unique End-to-End Transaction Reference (UETR), allowing banks and corporates to track payments in real time—similar to courier parcel tracking—and provides full visibility into intermediary bank fees, exchange rates, and deductions.
Perhaps most importantly, gpi is built on top of existing messaging infrastructure. Banks can go live with it in as little as three months because it works with their current IT stacks, making it cost-effective. Ultimately, GPI bridges traditional bank processing systems with modern, cloud-based tracking technology.
By 2020, just three years after its launch, over 70% of all international payments were sent via Swift gpi. BNP Paribas, one of the banks that joined several of Swift’s gpi pilot programs, declared in 2020 that “Swift gpi has completely transformed the international payment landscape.”
Co-opting Competitors
In an era of formidable fintech competitors, Swift has prevailed. To be sure, it has benefited from the familiarity of incumbent banks with its messaging network. But it has also illustrated a knack for co-opting some of its competitors.
For instance, the UK’s Wise, founded in 2011, was one of the first prominent payment fintechs to directly challenge Swift. Wise originally positioned itself as offering a faster, cheaper, and more transparent alternative to the Belgium-based interbank messaging network. Wise emphasized that by using local payment rails (such as ACH in the U.S. or SEPA in Europe), its customers could avoid the high fees and slow transfer times of traditional Swift wires.
Yet in September 2023, Wise and Swift announced they had joined forces. By that time, Wise was one of the most successful payment fintechs in the world, was listed on the London Stock Exchange, and had a valuation of around $10 billion. Wise’s managing director Steve Naudé presented the tie-up as a way to strengthen banks’ cross-border payment capabilities. “Our network, combined with Swift’s extensive reach and trackability, will make international payments more convenient, faster, and lower cost for banks, without necessitating a major tech build,” he said in a news release.
Singapore-based Thunes is another prominent payments fintech that has been stepping up cooperation with Swift. The two firms announced their initial collaboration in October 2024, aimed at bridging traditional banking infrastructure with mobile-first payment systems. The partnership was logical: While Swift is the standard for bank-to-bank messaging, it hasn’t traditionally connected well with mobile wallets. Thunes, meanwhile, gained access to Swift’s vast network of over 11,000 banks. Crucially, and in a similar vein to the Swift-Wise tie-up, no integration is required. Banks can leverage their existing Swift infrastructure to connect to Thunes’ Direct Global Network.
China’s Swift Alternative
Arguably the most unique challenge to Swift has come not from fintech startups but from the government of China. In 2015, Beijing unveiled the Cross-Border Interbank Payment System (CIPS), which offers an independent, yuan-denominated alternative for clearing and settling cross-border transactions.
The purpose of CIPS is to reduce China’s reliance on the dollar and support the internationalization of the renminbi. It emerged in part because of the Chinese leadership’s desire to develop a cross-border payment rail they could control and thus use to build resilience against the type of U.S.-imposed sanctions that Russia, Iran, and North Korea have faced.
In 2024, total annual volume passing through CIPS increased 43% to ¥175.49 trillion ($24.45 trillion), driven by a 24% increase to 8.2 million transactions. Since 2020, both the volume and number of transactions have more than tripled since 2020.
That said, CIPS still relies on Swift for roughly 80% of its transactions because it acts primarily as a clearing and settlement mechanism rather than a complete messaging network. CIPS uses Swift for secure communication between banks, especially for institutions not directly connected to the Chinese network.
While CIPS is growing, it lacks the extensive global network of the Belgian firm. To fully bypass Swift, a bank must be a direct participant in CIPS. As of early 2024, CIPS had only 140 direct participants compared to Swift’s 11,000+ member institutions.
Pivot To Stablecoins
Having developed gpi, partnerships with payment fintechs, and even signed an agreement with CIPS (in 2016), Swift is now turning its attention to stablecoins. The fiat-backed cryptocurrencies have an increasing number of adherents in the cross-border payments space, where they could boost speed and lower costs.
We reckon that they believe it can leverage its strengths as the paramount international financial messaging service to become a leading blockchain infrastructure provider. For that reason, it is developing a shared, permissioned ledger that allows banks to connect directly to blockchain networks, enabling the transfer of stablecoins, tokenized deposits, and central bank digital currencies (CBDCs). In this endeavor, Swift is collaborating with over 30 prominent financial institutions—including major banks like HSBC, Deutsche Bank, and JPMorgan Chase—and blockchain developer Consensys.
Because the initiative is interoperable with traditional correspondent banking rails, has a high transaction capacity within a secure environment, and is accessible by Swift’s global banking network, its prospects are good.
Even if one views the stablecoin fever sweeping the financial services sector as overly hyped, by launching this project with some of the financial industry’s biggest names, Swift is positioning itself to extract maximum benefits from banks’ desire for a piece of the action. If predictions about stablecoins’ utility are accurate, by creating a bridge between traditional correspondent banking and new technologies, Swift will secure its preeminence in the next big cross-border payments evolution.
And if stablecoins end up not quite living up to their lofty potential, well, the organization is still the world’s paramount financial messaging network with a growing list of able fintech partners.