How the SWIFT System Works - Deepstash
How To Build A Company

Learn more about moneyandinvestments with this collection

How to prioritize tasks effectively

How to manage your time efficiently

How to reduce stress and anxiety

How To Build A Company

Discover 115 similar ideas in

It takes just

15 mins to read

The SWIFT Money Transfer System

The SWIFT Money Transfer System

Today, it is easy to walk into a bank and transfer money anywhere around the globe, but how does this happen? Behind most international money and security transfers is the Society for Worldwide Interbank Financial Telecommunications (SWIFT) system. SWIFT is a vast messaging network used by banks and other financial institutions to quickly, accurately, and securely send and receive information, such as money transfer instructions.

26

476 reads

Key Points

Key Points

  • Society for Worldwide Interbank Financial Telecommunications (SWIFT) is a member-owned cooperative that provides safe and secure financial transactions for its members.
  • This payment network allows individuals and businesses to take electronic or card payments even if the customer or vendor uses a different bank than the payee.
  • SWIFT works by assigning each member institution a unique ID code that identifies not only the bank name but country, city, and branch.

23

264 reads

The SWIFT Transaction Code

The SWIFT Transaction Code

SWIFT assigns each financial organization a unique code that has either eight characters or 11 characters. The code is interchangeably called the bank identifier code (BIC), SWIFT code, SWIFT ID, or ISO 9362 code.

It is broken down as follows:

  • The first four characters: the institute code
  • Next two characters: the country code
  • Next two characters: the location/city code
  • The last three characters: optional, but organizations use them to assign codes to individual branches.

27

175 reads

The World Before SWIFT

The World Before SWIFT

Prior to SWIFT, Telex was the only available means of message confirmation for international funds transfers. Telex was hampered by low speed, security concerns, and a free message format. Telex senders had to describe every transaction in sentences that were then interpreted and executed by the receiver. This led to many human errors.

To circumvent these problems, the SWIFT system was formed in 1973. Six major international banks formed a cooperative society to operate a global network that would transfer financial messages in a secure and timely manner.

23

164 reads

The Dominance Of SWIFT

The Dominance Of SWIFT

Although there are other message services like Fedwire, Ripple, and Clearing House Interbank Payments System (CHIPS), SWIFT continues to retain its dominant position in the market. Its success is attributed to how it continually adds new message codes to transmit different financial transactions.

While SWIFT primarily started for simple payment instructions, it now sends messages for a wide variety of actions, including security transactions, treasury transactions, trade transactions, and system transactions.

25

148 reads

The Users Of SWIFT

The Users Of SWIFT

Initially, SWIFT founders designed the network to facilitate communication about Treasury and correspondent transactions only. The robustness of the message format design allowed huge scalability through which SWIFT gradually expanded to provide services to the following:

  • Banks
  • Brokerage Institutes and Trading Houses
  • Securities Dealers
  • Asset Management Companies
  • Clearing Houses
  • Depositories
  • Exchanges
  • Corporate Business Houses
  • Treasury Market Participants and Service Providers
  • Foreign Exchange and Money Brokers

23

87 reads

Services Offered by SWIFT

Services Offered by SWIFT

The SWIFT system offers many services that assist businesses and individuals to complete seamless and accurate business transactions. Some of the services offered are listed below.

  • Applications for processing clearing and settlement instructions for payments, securities, forex, and derivatives transactions.
  • Business Intelligence and compliance services.
  • Messaging, Connectivity, and Software Solutions.

24

198 reads

The Commercial Aspects Of SWIFT

The Commercial Aspects Of SWIFT

  • SWIFT is a cooperative society owned by its members. All members pay a one-time joining fee plus annual support charges which vary by member class.
  • SWIFT also charges users for each message based on message type and length. These charges also vary depending upon the bank’s usage volume; different charge tiers exist for banks that generate different volumes of messages.
  • SWIFT has launched additional services. These are backed by the long history of data maintained by SWIFT. These include business intelligence, reference data, and compliance services and offer other income streams for SWIFT.

23

96 reads

Challenges for SWIFT

The majority of SWIFT clients have huge transactional volumes for which manual entry of instructions is not practical. The need for automation for SWIFT message creation, processing, and transmission is growing. However, this comes at a cost and increased operational overhead.

Although SWIFT has been successful in providing software for automation, that too comes at a cost. SWIFT may need to tap into these problem areas for the majority of its client base. Automated solutions within this space may bring in a new stream of income for SWIFT and keep clients engaged in the long run.

24

112 reads

The Bottom Line

SWIFT has retained its dominant position in the global processing of transactional messages. It has recently forayed into other areas, such as offering reporting utilities and data for business intelligence, which indicates its willingness to remain innovative. In the short- to mid-term, SWIFT seems poised to continue dominating the market.

23

94 reads

CURATED BY

kallic

I'm passionate about music and cooking. Also my dog is named after a superhero.

Ready for the next level?

Read Like a Pro

stash-superman-illustration

Explore the World’s

Best Ideas

200,000+ ideas on pretty much any topic. Created by the smartest people around & well-organized so you can explore at will.

An Idea for Everything

Explore the biggest library of insights. And we've infused it with powerful filtering tools so you can easily find what you need.

Knowledge Library

Powerful Saving & Organizational Tools

Save ideas for later reading, for personalized stashes, or for remembering it later.

# Personal Growth

Take Your Ideas

Anywhere

Organize your ideas & listen on the go. And with Pro, there are no limits.

Listen on the go

Just press play and we take care of the words.

Never worry about spotty connections

No Internet access? No problem. Within the mobile app, all your ideas are available, even when offline.

Get Organized with Stashes

Ideas for your next work project? Quotes that inspire you? Put them in the right place so you never lose them.

Join

2 Million Stashers

4.8

5,740 Reviews

App Store

4.7

72,690 Reviews

Google Play

Ashley Anthony

This app is LOADED with RELEVANT, HELPFUL, AND EDUCATIONAL material. It is creatively intellectual, yet minimal enough to not overstimulate and create a learning block. I am exceptionally impressed with this app!

Shankul Varada

Best app ever! You heard it right. This app has helped me get back on my quest to get things done while equipping myself with knowledge everyday.

samz905

Don’t look further if you love learning new things. A refreshing concept that provides quick ideas for busy thought leaders.

Sean Green

Great interesting short snippets of informative articles. Highly recommended to anyone who loves information and lacks patience.

Giovanna Scalzone

Brilliant. It feels fresh and encouraging. So many interesting pieces of information that are just enough to absorb and apply. So happy I found this.

Ghazala Begum

Even five minutes a day will improve your thinking. I've come across new ideas and learnt to improve existing ways to become more motivated, confident and happier.

Laetitia Berton

I have only been using it for a few days now, but I have found answers to questions I had never consciously formulated, or to problems I face everyday at work or at home. I wish I had found this earlier, highly recommended!

Jamyson Haug

Great for quick bits of information and interesting ideas around whatever topics you are interested in. Visually, it looks great as well.

Read & Learn

20x Faster

without
deepstash

with
deepstash

with

deepstash

Access to 200,000+ ideas

Access to the mobile app

Unlimited idea saving & library

Unlimited history

Unlimited listening to ideas

Downloading & offline access

Personalized recommendations

FAQ

Claim Your Limited Offer

Get Deepstash Pro

Supercharge your mind with one idea per day

Enter your email and spend 1 minute every day to learn something new.

Email

I agree to receive email updates