What is SWIFT and How Does It Work?

Carol Amegatcher

Carol Amegatcher

5 min read

2021-04-14

What is SWIFT and How Does It Work?

Society for Worldwide Interbank Financial Telecommunications (SWIFT) provides safe and secure financial transactions for its members. It is a messaging network that safely passes messages between financial institutions. This process is done in a very secure and protected manner. 

How Does SWIFT Work?

SWIFT and how it works

Messaging solutions

SWIFT acts as a messaging solutions platform for banking and payment transactions and has solutions to alleviate operational and compliance risks. Listed below are some products and/or services of the messaging solutions:

The Basic Tracker

The Basic Tracker is an easy way for banks to track and confirm cross-border payments. The tracker is free and can be accessed via a simple user interface. It also enables you to track all your payments from end-to-end in real-time. You can manually confirm payments and meet the requirements around universal confirmations. Confirmations allow for financial institutions to provide a satisfactory customer experience in that there is transparency in funds being sent to their destination.

The Basic Tracker is easy to access using an online interface, providing user-friendly tracking and confirmation features. It also lets you gauge your own performance.

SWIFT gpi

This ensures that international payments meet the industry’s traceability and transparency. It allows banks to provide their customers with a transformed payment experience, enabled through digital tools that are easy to use and simple to set up.

Interbank Payments

The interbank payments and corresponding banking are secure, reliable, compliant, and efficient. This messaging service carries more than 23 million structured messages a day in a secure and reliable manner. It offers features such as industry-level security, message validation, and non-repudiation proofs. This system has built-in features such as message retrieval for conflict resolution, recovery of lost data, and audit compliance for anti-money laundering and Know Your Customer (KYC). Messages are duplicated to third parties for monitoring, and data is kept up to date with little to minimal manual intervention.

SWIFT Copy Services

This service sends copies for authorization to third parties, depending on the boundaries you set. It manages solutions such as payment clearing and settlement, internal administration, and collateral management for securities, amongst others. Messages can be customized to suit, for instance, currencies or account numbers.

Other global financial messaging solutions that it provides are not limited to the above, but also include managing solutions for capital markets, drive trade digitization, and messaging solutions for FX and treasury.

Key Takeaway: SWIFT is a messaging solutions platform for banking and payment transactions and has solutions to alleviate operational and compliance risks.

Interfaces and Integration

SWIFT integration and services

It has a wide range of products and services to meet business operational needs. These interfaces and integrations allow for effective communication between SWIFT and your back-office systems.

Alliance Access

Alliance access SWIFT’s flagship messaging interface. It allows connecting business applications to SWIFT messaging services.

Alliance Cloud

Alliance cloud is a cloud-based platform. It connects over 10,000 counterparts and messaging services.

Alliance Lite2

Allows you to access the financial industry through the SWIFT Community Cloud.

Alliance Messaging Hub

Alliance messaging hub is a multi-network financial messaging solution. It uses the latest technology to manage messages.

Compliance and Shared Services

The compliance and shared services help to reduce cost and risk and meets the challenges of financial crime compliance.

Financial Crime Compliance

Financial crime compliance is a portfolio of solutions to support compliance across operations.

Business intelligence

You can discover new insights into market trends. It has a dynamic data analysis to bring out ongoing issues and subsequently informs decision making.

Conclusion

Banks and financial institutions rely on this messaging platform to provide a consistent and universal way to ensure money reaches one country from another. Apart from financial institutions, other businesses such as clearing systems and money brokers, amongst others, use this messaging platform as well.

FAQ

  • What is SWIFT and how does it work?

It stands for Society for Worldwide Interbank Financial Telecommunications. It is a messaging network that safely passes messages between financial institutions. However, it does not hold funds on behalf of customers.

  • What is the SWIFT payment system?

SWIFT payment system allows people and companies or businesses to carry out cross-border financial transaction communications amongst one another, securely.

  • What is SWIFT in banking?

SWIFT is a bank-to-bank messaging network. It carries out instructions on transferring funds from one bank to another.

  • How do I find my bank’s SWIFT code?

Your bank’s SWIFT code can usually be found in your bank account statements. The code consists of 8 – 11 numbers and letters. The first 4 characters represent the name of the bank. The next 2 characters represent the country. The following 2 characters represent the city and the remaining characters represents the branch, but this is not always inclusive.

Reference

Global Financial Messaging Solutions

Further Reading

How the Swift System Works

 

 

Carol Amegatcher
Written by Carol Amegatcher

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