SWIFT is a worldwide messaging network for financial institutions. It stands for Society for Worldwide Interbank Financial Telecommunication. It is a network used by financial institutions to transmit information and instruction through a standard system of codes. It is a secure, reliable, and standardized system of networks used by financial institutions throughout the world to send and receive different types of information. It is a leading financial telecommunication network to communicate financial information in a highly reliable and confidential manner.
SWIFT is used for different types of financial transactions including money transfer, account statement transmission, confirmation of foreign exchange deals, collection of payment, letter of credit settlement, trade-in securities, negotiation of dispute issues, etc. It has to be understood that SWIFT is not a clearing agent, fund manager, or managing customer account. It is only the communication network in which transmitted messages are recorded as book entries on NOSTRO and LORO accounts. SWIFT is a non-profit organization whose profit earned is spent on the cost incurred and the development or upgrading of the system.
Different Services Offered by SWIFT
The SWIFT connection enables access to a variety of applications including real-time instruction, matching for treasury, forex transactions, payment processing between banks, clearing and settlement instructions for payment or securities or derivatives, etc.
Business Intelligence through dashboards and reporting utilities for a real-time view of monitoring the messages, activities, trade flow, and reporting
Compliance service through Know Your Customer (KYC) and Anti-Money Laundering (AML)
Connectivity, messaging, and software solution to its clients
Advantages and Disadvantages of SWIFT
| Advantages | Disadvantages |
| Highly accurate transmission of financial messages throughout the world Security and confidentiality of transmitted data through a multi-level combination of physical, technical, and organizational protection Low cost than traditional telecommunication channel Faster delivery of the message with the time needed being not more than 20 minutes Increases processing and efficiency of transaction Financial guarantee to customers as the society will cover all the losses of the customers due to message delivery failure | High entering fees for the customers High membership and membership renewal fees for banks Strong dependence on systems Use of complicated or complex appliances for the operational the system Need of specific skills and competencies for its operation |
