SWIFT stands for Society for Worldwide Interbank Financial Telecommunications in the field of banking. It is a type of network involved in the transfer of financial messages that requires privacy and safety while being transported. Telecommunication, also popularly known as telecom, is a form of sending and receiving pieces of information through an electronic platform. The data to be transported can be in the form of text, codes, pictures, voices, and video. The common devices or instruments that facilitate telecom are Mobile, cell phones, satellites, fibre optics, radio, television broadcasting, microwave communications and the internet. Telecommunications has a wide range of applications in daily life, banking, business, communication, networking, entertainment and more.
SWIFT is a telecommunication network that transfers financial messages across the globe by shielding the data conveyed. The main goal of the Society for Worldwide Interbank Financial Telecommunications is to initiate payments and transactions securely by facilitating messages. It does not involve controlling funds and accounts, it just directs financial messaging. It was launched in 1973 in Brussels, Belgium with partnering 15 countries that involved 239 branches of banks.
SWIFT was first started in Belgium and it serves as the headquarters of the SWIFT. The office of SWIFT has its branches in various countries like has offices in the United Kingdom, UAE, France, Germany, Mexico, Russia, Austria, South Africa, Spain, Ghana, Hong Kong, Singapore, Japan, Indonesia, Kenya, South Korea, Malaysia, Australia, Brazil, China, Sweden, Switzerland, India, and Italy.
SWIFT has split its stakes to about 3500 shareholder countries. The top six countries have assigned two directors as representatives on the SWIFT board. The top countries that have placed two directors on the board are Belgium, France, the U.S., the U.K., and Switzerland. The other countries that hold shares and have assigned one director are Luxembourg, Russia, Spain, Japan, the Netherlands, Singapore, Italy, South Africa, Sweden, Australia, Canada, China, Germany, and Hong Kong.
There are about 25 board of directors elected from different countries to organise SWIFT. The board directing the SWIFT has the authority to select a chairman and a deputy chairman. The board of directors has the control over the function of six different committees. Those six different committees are:
SWIFT has established itself as the industry standard for financial messaging patterns. Many well-known financial processing systems can read and process messages formatted to SWIFT standards, whether the message passed across the SWIFT network. SWIFT collaborates with international organisations to establish communication format and content standards. SWIFT also holds the Registration Authority (RA) for the ISO standards listed below:
BIC which is abbreviated as Business Identifier Code or Universal Business Identifier Code is called the SWIFT code. This BIC can also be termed as a SWIFT address. The most important action of SWIFT was to introduce the BIC to aid transactions between different sets
The SWIFT code is constructed with 12 characters. It is a set of alphanumeric codes. The 12 components of BIC code can be as follows:
1,2,3,4 – Bank code
5,6 – Country code
7,8 – Location code
9 – Logical terminal code
10,11,12 – Branch code.
Code 1 to 8 belongs to the SWIFT destination and code 1 to 9 can be termed as logical terminal identifier.
Based on the access provided to the users of the Society for Worldwide Interbank Financial Telecommunications service, they are categorized into three classes. They are:
SWIFT is commonly used by people around the world. Some common sectors of users are bankers, depositors, money brokers, foriegn goods exchangers, traders, market service providers, asset management companies, corporate companies, business firms and more.
Though SWIFT acts as a cosy tool for financial message transfer, it also has some drawbacks that affect the user service. Some of them are:
The society for Worldwide Interbank Financial Telecommunications is working to overcome the shortcomings and has managed to produce a cost-effective tool for automation.
The Society for Worldwide Interbank Financial Telecommunications has brought in a revolution in financial data transfer and messaging. The conventional systems available for international fund transfer messaging were slow, insecure, diverse and hard to handle. SWIFT emerged as a solution for all the Pre-existing problems and served as the best platform for sending and receiving financial telecommunications.
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