Bold Critique of SWIFT: Justified or Not?

Even as SWIFT volumes have ascended to record levels amid the global pandemic, The Economist has issued a call for SWIFT to reform its governance in order to modernise and stave off challenges to preserve its dominance in the payments space.

In an October 2021 editorial (“Be swift, be bold”), The Economist acknowledged as impressive the record-setting USD 140 trillion in transactions value carried via SWIFT over the past year, but added that “more must be done to modernise the payments architecture if its pre-eminence is to last.”

The Economist contends that “democracies should ensure their systems are faster, cheaper and safer so that they remain firms’ first choice on merit.” Of speed, cost, and security, it is unclear in which of these areas SWIFT is grossly lacking and vulnerable against upstart enterprises. The editorial references the 2016 incident when North Korean hackers used stolen SWIFT credentials to rob Bangladesh’s central bank, but this did not occur due to any SWIFT error or system deficiency. Although The Economist admits that not all transactions need to be settled immediately and in spite of SWIFT upgrades to its network, the editorial suggests SWIFT is not striving toward future acceleration of payments. Ultimately, The Economist calls for SWIFT to reform itself by diversifying its 25-seat board that is disproportionately comprised of European banks to include better representation from America and Asia.

One longtime LC specialist familiar with SWIFT’s origins and history contacted by DCW offered a view which largely intersects with that presented by The Economist. “SWIFT has come a long way since 1973 [its founding year] but I personally believe it has become so large that it has lost touch with every size of its global clientele. It is Euro-Centric and dominated by big banks which was a concern expressed in the early meetings of its founding. They vowed it would never happen. I am in agreement with the sentiment expressed in The Economist regarding the latter. SWIFT is treated a bit too sanctimoniously by the current generation of bankers. I think it needs pushed to diversify its [Board of Directors], not only geographically but with smaller banks.”