A response from Mastercard CEO Michael Miebach at the ongoing Davos Forum has raised eyebrows. He doesn’t think the SWIFT system will still exist in 5 years
Will SWIFT be the end of the interbank payment system?
The World Economic Forum (WEF), also known as the Davos Forum, organised by the Global Blockchain Business Council, is currently taking place. Many actors of the financial system are present to discuss several themes and in particular the future of cross-border payments, and the potential of central bank digital currencies (CBDs).
A panel on MNBCs brought together players from the sector including Michael Miebach, CEO of Mastercard, Yuval Rooz, CEO of Digital Asset, and David Treat, director at Accenture and co-founder of the Digital Dollar Project (an organisation tasked with studying the potential and development of a US MNBC).
Also present at the meeting were Jennifer Lassiter, Executive Director of the Digital Dollar Project, and Jon Frost, Senior Economist at the Bank for International Settlements (BIS).
Kicking off GBBC’s BlockchainCentral Davos session on CBDCs with @eva_szalay @FT @YuvalRooz @digitalassetcom @Jbrookslassiter @Digital_Dollar_ @MiebachMichael @Mastercard @BIS_org @DBTreat @Accenture pic. twitter.com/C2fvgy0Bij
– Global Blockchain Business Council (GBBC) (@GBBCouncil) May 24, 2022
One answer to a question in an interview caused astonishment in the media and in public opinion. It came from Mastercard CEO Michael Miebach, who simply answered “no” when asked whether SWIFT, the current interbank messaging system that enables cross-border payments, will still exist in five years’ time.
Despite his smile during his answer, everyone seemed to take his answer seriously. It was not expected given his position at Mastercard, which is a major user of SWIFT.
The other personalities present at the conference did not seem to share the same opinion as they all answered that SWIFT will still exist in five years time.
Yuval Rooz still thinks that this interbank payment system could be replaced one day, but that five years would not be enough. He is waiting to see other emerging technologies.
The CEO of payment giant Mastercard was the only one to say that SWIFT may not be the dominant system for transferring money between continents in the near future.
A response to be qualified
It should be made clear here that this is a qualified response, as it is not a direct statement, but simply an answer to a question. No one can say that the CEO of Mastercard was really serious, or even the arguments put forward, as there are none. But it is still a paradigm shift for a major player in payments.
A Mastercard spokesperson downplayed the impact of Miebach’s response in an emailed statement after the interview:
Let us clarify the intent of the comment on stage, as it is not as simple as a yes or no answer. Michael simply reinforced what SWIFT has said before: its operations continue to evolve. Its current form will not be the same in the future. They are adding more functionality and not just being a messaging system. “
Miebach thus seemed to be saying that the current system would no longer exist, replaced by a more advanced SWIFT with new features.
SWIFT system tries to modernise
SWIFT processed 42 million messages a day last year, but transactions on the network can take several days. The company is trying to maintain its relevance in the international financial system, especially with regard to central banks’ digital currencies.
As early as May 2021, SWIFT explored the use of MNBCs to facilitate payments between countries and continents. More recently, on 19 May 2022, SWIFT announced on Twitter its second round of experiments involving MNBCs, working with French IT company Capgemini.
We’re collaborating with @Capgemini to explore how SWIFT can interlink the multiple domestic-based CBDC networks emerging worldwide to make cross-border payments with DigitalCurrencies more seamless and frictionless.
Learn more: https://t.co/SgvjDf1dl4 pic.twitter.com/99g99A070H
– SWIFT (@swiftcommunity) May 19, 2022
As SWIFT strives to remain attractive, new technologies are being explored to speed up cross-border payments. Inevitably, blockchain comes to mind for the speed of transactions.
