SMQKE x SWIFT: A Conversation with Standards Expert Tom Alaerts🏦💨

think we might think he just sprupped down. Hey, spaces is not the easiest platform to navigate you guys for the first time. So I hope everyone is just being very considerate to time here. I do think he's not an active ex-user. I do believe this is his first spaces being considered and kind as well. I do think this is a very new experience for him. So definitely have some grace for this, especially guess that we have. So I'm inviting him back up now. I think he might have just dropped down and came back to reset his audio. He is coming up now. I think we are getting his backup. Got it. All right. Now I switched off my Mac. I don't know what the issue was. And now it's only my iPhone. So I think we're getting now on audio. Yeah, I think so. So sorry about the delay. I never used spaces, but I didn't expect to be an issue. But anyway, we should be talking now. So I believe you wanted to know a bit more about Swift at the moment. Yes. I was speaking on just in the crypto community. There's just some narrative, some interpretation that Swift did. They decaying system that is going to lose relevance in the payment infrastructure world. And I personally don't see that. I see a more hybrid strategy being rolled out and I just was curious one year person interpretation on the significance of Swift and why it's not likely to be replaced by digital currency networks. Yeah, that's actually a good question. And well, I'm not that swift anymore. So I cannot 100% speak for the current strategy. However, I've got quite an opinion on that. So I mentioned to you before that, well, I think Swift was the original vintage. That is really how you can see it. And it has been successful also by evolving with market needs, such as now regarding crypto evolutions. And we come to that. Now, an important thing that I think many, you could say, younger vintakes and the estimate, is a reason for Swift's success is the very good thoroughness and oversight. So it has been overseen by the G7 central banking. And it's also in the process of becoming a truly regulated entity. And that is important because Swift is a systemically important feature of the international world, with the whole GDP traveling around the world in every two days or something like that. And so that extreme trust is very important for the financial sector, also the neutrality as well. And Swift is a kind of a nonprofit. You could say it's run as a commercial company to be efficient, which is also really an industry utility. But really, I think the oversight that is there on Swift, the governance, make it extremely important. And then I was in the standard team, which is kind of the very neutral platform on how to make the whole world talking the same language. That is another element of why Swift was important. And people say that the decaying system, however, year on year, the payment traffic and security traffic are increasing. So currently, something is doing right. And then regarding the evolution, already a number of years ago, Swift launched GPI, which at least some of you heard about. It's a more efficient international payment flow process, you could say, a practice. Now, of course, the electrons on the Swift network don't go slower than on other networks. It was rather that the correspondent banking model originally allowed from some delays, so that banks in the middle have interest that they can have from payments that are flowing through them. And the GPI system really reduced that. In I believe that currently, something like three quarters of the payments, they arrive in maximum 20 minutes or something like that, and many in seconds. And so yes, it can be slower. But when it's slower, it's almost always related to sanction screening that you have an unfortunate name that needs to be tripled checked as an example. And that usually requires a manual intervention as well. Then when you have sanctions, investigations, compliance investigations. And to be frank, you'd have that challenge. You have that no matter the technical infrastructure that you use, no matter if it's traditional, you could say traditional payments network, or whatever other technology. And then because Swift was, well, is an organization that it actually actively serves the bank, so it works on what banks want to focus on. And clearly, there has been more and more interest in digital assets and blockchain. So this is why Swift is also operating now in that area. You could say it's still relatively early days. But this has also to do with the fact that you could say maybe perception that Swift might be a bit slow, but it has also to do with the thoroughness that you have there to do things really properly. And well, I'm not part now of the current initiative. There is a blockchain with something like 30 banks or so, who have already been using it as a universal, universal, neutral solution for especially in the area of liquidity management, which I think is one of the big advantages of blockchain to have that instantly liquidity. And so that shows that the organization is nibbling off to evolve with the needs. And technology is just technology in the end. Swift is looking at these things. And they're still looking at agentic payments and so on. So it's not that it's an organization that you could say locked into a traditional messaging based paradigm, which has its qualities, as I mentioned, GPR, and mentioned that it scales very well for high volumes and so on. It's certainly a quality. So I think, and you mentioned the word hybrid, I think indeed. Well, first of all, Swift is evolving in my perception. Now we'll be as an outsider to offer also a hybrid solution, depending on what its customers are in as the banks. And also the owners, banks also the owners of Swift, what they want. And it will be, like it was already in the past, it will be part of a multi-legged connection model that banks may want to use. You see that they have a direct connection, direct connection with other banks. And that happens. It might be that they don't use Swift. And actually, that happened before blockchain becomes so popular. Banks who have direct connection could, in theory, bypass Swift and well, they have to take care of all the settlement details and so on in the conflines, et cetera, et cetera. I mean, they can do that. And it happened on some corridors. You could see on some channels between banks. So in that context, I think it will be there for a long time to come and certainly in the area of traditional payments and of traditional security. It's not going away. And what I see, and I was there at the start in proof of concepts when it comes to newer technologies, their evolving, to stay relevant because that's what the owners being the banks want them to do. I hope that is clarifies. Definitely clarifies. And just for anyone who is curious on the numbers, when we're discussing the relevance of Swift, and how much value they move, you mentioned the GDP of the entire world every two days. It's about over $140 trillion, you guys. That is a lot of capital. That is a lot of money. That is not a level of capital that is simply going to be, we raced or washed away. And also, he discussed a lot of on the aspect of trust. These banks, trust Swift has built trust in their system over decades. And that is a much longer time than these fintechs or other digital currency networks I've had to earn the trust of the system. That is essentially why we're, as you mentioned, confirm that we are heading toward a more hybrid architecture for finance as opposed to Swift replacing crypto or crypto replacing the entire Swift network. Would you say that's a pretty accurate sound? Thank you. Yes, indeed. Indeed. I think that's what we, I think that is the correct observation. And really, the covenants and trust that come back to that, it cannot be underestimated. And the neutrality, the role of the system, it is also very co-asset. And also the extreme security. There is a whole department looking at the security of Swift is baked into everything that Swift does is the operational excellence. And there's this both reliability and security. And those are very important qualities when we talk about these three ends of the day. You don't want any risk in that, so I there are multiple layers of authentication and encryption happening. And constant network monitoring across the world. These are important features for reliability. More important, I would say, then you could say, the latest technical innovation. And yes, Swift is also looking at those as well. So that definitely is a very appropriate topic and new technologies for the next question that I have. And that's specifically the transition towards digital assets. Now when you look around, if you're in finance, if you're in crypto, if you're just in this digital assets based in general, the signs are very clear. Institutions are coming on chain for the first time. Blockchain is being taken seriously. The protocols are maturing. Regulatory clarity is becoming a reality. Utility is becoming prioritized. And the fundamentals of these networks are truly being judged for the solutions that they bring into the financial system as opposed to speculative assets or mean tokens. Serious blockchain products are truly coming to the forefront and are being acknowledged and spotlighted by the traditional system for the first time in crypto but underneath all of these headlines underneath all of the developments from the DTCC Swift target two and the EU, all of these payment systems and major market settlement infrastructures all tie back to the same standard. And that's ISO2022, DTCC's tokenization service is the underlying messaging standard that's compliant with is ISO target two. It's compliant with ISO. That's essentially the European version of Swift and any other major payment system is compliant with ISO as well. And they are also, again, integrating blockchain technology, crypto technology as well. So Tom, from your perspective, how significant would you say is ISO2022 in supporting this massive digital estate transition that we're all witnessing at this moment? What role would you say that this standard plays in connecting the old system to the new system?