SWIFT stands for Society of Worldwide Interbank Financial Telecommunications. SWIFT was founded in Brussels in 1973 under the leadership of its inaugural CEO Carl Reuterskiรถld (1973–1983). It started to establish common standards for financial transactions and a shared data processing system and worldwide communications network. At present, the majority of international interbank messages use the SWIFT network. It is a dedicated computer network that is set up to support fund transfer messages between member banks worldwide. The majority of international interbank messages use the SWIFT network.
SWIFT transports financial
messages in a highly secure way, but does not hold accounts for its members and does not
perform any form of clearing or settlement.
SWIFT does not facilitate funds transfer, rather, it sends payment orders, which must be settled via correspondent
accounts that the institutions have with each
other. Each financial institution, to exchange banking transactions, must
have a banking relationship by either being a bank or affiliating itself with one (or more) so as
to enjoy those particular business features.
Banks use SWIFT to reach their counterparties, achieve operational cost efficiency, enhance their customer’s experience and improve liquidity risk management.