'One Machine can do the work of fifty ordinary men. No machine can do the work of one extraordinary man.'

Elbert Hubbard
 

Transfer of money to overseas for the various purposes like emigration fee, trade-related payments, travel expenses, etc may be done instantaneously. Today, it is easy to walk into a bank and transfer money anywhere around the globe, but how does this happen? Behind the most international money and securities transfer is the SWIFT (Society for Worldwide Interbank Financial Telecommunications) system. SWIFT is a vast messaging network used by banks and other financial institutions (FIs) for receiving and sending the financial and non-financial messages quickly, accurately, and securely such as money transfer instructions, letter of credit (LoC).

 

Prior to SWIFT, Telex was the only available means of message confirmation for international funds transfer. Telex was hampered by low speed, security concerns, and a free message format. In other words, Telex did not have a robust unified system of codes like SWIFT to name banks and describe transactions. Telex senders had to describe every transaction in sentences which were then interpreted and executed by the receiver. There were more possibilities of errors due to manual human intervention.

 

Why was SWIFT established?

 

To circumvent these problems, the SWIFT system was formed in 1973. It is a cooperative society under Belgian law and the world's leading provider of secure financial messaging services. It provides its community with a platform for messaging, a standard format for communicating the specific instruction. It is owned and controlled by its shareholders, having head office in Brussels. Seven major international banks formed a cooperative society to operate a global network that would transfer financial messages in a secure and timely manner. Customers using the SWIFT network can connect to it in a variety of ways such as directly through permanently leased lines, through the Internet, or through SWIFT's own cloud.

 
To read more, please subscribe.