Currently, most global banking trasactions rely on a consortium of banks, using the SWIFT system. Unfortunately, SWIFT transactions are sometimes still painfully slow and expensive compared to the minutes needed to move some cryptocurrencies, with very low fees.
"Interbank payment systems such as SWIFT are old, inflexible, slow, and increasingly prone to cyberattacks at a time when banks are under tremendous pressure to cut costs and protect customer data from hackers, which blockchain could achieve," said investment bank Credit Suisse in an earlier statement.
SWIFT is simply a messaging system between banks, operating on up to 24 million transactions per day. To compare, Bitcoin currently handles around 300,000 transactions through its blockchain, and Ethereum handles around 500,000 transactions. Ripple, the system most touted as a replacement of banking communication, can handle up to 1,000 transactions per second, or more than three times the volumes of SWIFT, but that is only when other bottlenecks are excluded.
The VISA system is still the fastest, with 24,000 transactions per second.
But one of the biggest concerns is security, as the SWIFT banking network seems to be extremely vulnerable to attacks. The most recent attacks are attributed to the Lazarus group, which has been linked to North Korea cyber attacks. Funds were stolen by impersonating the bank's SWIFT credentials.
All the while, it is impossible to impersonate on the blockchain, where each user and transaction use unbreakable cryptography.
The CEO of the SWIFT system is also a blockchain skeptic. Gottfried Leibbrandt compared the current appetite for Bitcoin to the "tulip mania" of the 16th century. But Microsoft and other banks have tested blockchain solutions for interbank transfers. SWIFT has responded to the hacks by increasing security and actually getting more clients on board in the past years.
Deploying blockchain solutions in parallel or in place of SWIFT would require banks to overhaul some internal procedures to offer a smoother service, and for now adoption is in the test stage.