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Cited by 61Digital Transformation in Financial ServicesDigital Platforms and EconomicsHistory of Computing Technologies

Origins and development of SWIFT, 1973–2009

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Scott, Susan V., Zachariadis, Markos·2012·Business History
DOI 10.1080/00076791.2011.638502
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Abstract

Research in this article traces the origins of a not-for-profit financial institution called the Society for Worldwide Interbank Financial Telecommunication (SWIFT). SWIFT is a core part of the financial services infrastructure and is widely regarded as the most secure trusted third party network in the world, serving 200 countries with over 8000 users. The analysis focuses on how the design and current state of SWIFT was influenced by its historical origins. In order to ensure widespread compatibility in a sector experiencing asynchronous technological development, legacy Telex specifications had to be accommodated in SWIFT's design. Over time, what began as a closed ‘society’ founded to reduce errors and increase efficiency in interbank payments grew into an industry cooperative supporting an enthusiastic community of practice and transformed into an unexpected network phenomenon. SWIFT achieved such success that it has been accused of being an installed base stifling innovation. In recent years, SWIFT has had to institute new categories of membership in an effort to counter concerns about its bank-dominated governance and it continues to search for ways to meet the requirements of key constituents in the financial supply chain.

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  • SWIFT's primary role is as a message carrier, securely transporting payment instructions between financial institutions.

    “The primary role of SWIFT is as a message carrier: the SWIFT network securely transports messages containing the payment instructions between financial institutions involved in a transaction.”

    From Financial Sanctions, SWIFT, and the Architecture of the International Payment System (2023) · cites this paper as Scott and Zachariadis 2012

  • SWIFT provides two main services: a secure network for transmitting messages between financial institutions, and development and maintenance of syntax standards for financial messages.

    “SWIFT provides two main services to the financial sector: (1) a secure network for transmitting messages between financial institutions; and (2) the development and maintenance of a set of syntax standards for financial messages (Scott and Zachariadis 2012).”

    From Financial Sanctions, SWIFT, and the Architecture of the International Payment System (2023) · cites this paper as Scott and Zachariadis 2012

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Research works printed but not linked: 42

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  37. A talk delivered at the Computer Conference of Barclays Banks International, June 1975.
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  39. Our discussion of the early stages of SWIFT network design and technology development has been edited but can be found in Scott and Zachariadis (2010) and Zachariadis (2011). This includes technical details about: the switching centres; data concentrators; network interface issues; the SWIFT Interface Device known as SID, ST100, ST 200; the founding of SWIFT Terminal Services S.A. (STS); and the emergence of a supporting software market. We also discuss the development trajectory from central switches to distributed networks and packet switching. 22 Guildhall Library Manuscripts (GLM) Section, M32326B, File No. 253, British Bankers Association (BBA), Private and Confidential Communication, February 23 rd , 1979. Up to then SWIFT had a theoretical capacity of 200,000 messages per day however, there were concerns regarding its capability to deal with the transactions' load in the near future. 23 Unpublished document on SWIFT standards, Brussels, circa Jan., 2001.
  40. Each "Message Type" (MT) was codified using a three-digit number. The most common message type was MT100, which was an instruction for a customer fund transfers. Other commonly used messages were the MT200 for bank transfers, and the MT300 for foreign exchange transactions. "Fields", which had a distinct business meaning, were identified by a two-digit number. An additional alphanumeric character could be added in the end of the number to specify additional options. Not all fields were mandatory for a transaction to take place.
  41. CLS (Continuous Linked Settlement) is the 'largest multi-currency cash settlement system' founded to reduce and control the risks of foreign exchange (FX) transactions (www.cls-group.com)
  42. The "big" banks came to realize that they 'can no longer push their proprietary networks on to investment managers as an alternative to SWIFT' (pp.1) from 'SWIFT lets in fund managers'. (1992). The Banker, 142, 1. 'The big US banks led the opposition', along with some German, French, and Japanese banks, however, their resistance is expected to be reversed. Information obtained from 'Global Custody' (1992), The Banker, 142, 795, (pp.1). 41

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Authors
Scott, S. V., & Zachariadis, M.
Affiliations
  • London School of Economics and Political Science (GB)
  • University of Cambridge (GB)
Corresponding author
Scott, Susan V.
ORCID
Venue
Business History
Publisher
Informa UK Limited
Published
2012-06
Volume
54
Issue
3
Pages
462-482
ISSN
  • 0007-6791 (ISSN-L)
  • 1743-7938
DOI
10.1080/00076791.2011.638502
OpenAlex
W2038015209
Cited by
61
References
4
Citations by year
2026: 10 · 2025: 4 · 2024: 6 · 2023: 9 · 2022: 4 · 2021: 3 · 2020: 9 · 2019: 3 · 2018: 3 · 2017: 2 · 2016: 1 · 2015: 1 · 2014: 4 · 2013: 2
FWCI
5.32
Type
journal article
Language
en
Open access
Locations
  • Business History (publishedVersion)
  • London School of Economics and Political Science Research Online (London School of Economics and Political Science) (acceptedVersion)
  • London School of Economics and Political Science Theses Online (London School of Economics and Political Science) (acceptedVersion)
  • RePEc: Research Papers in Economics (submittedVersion)
  • Research Explorer (The University of Manchester) (submittedVersion)
Topics
  • Social Sciences › Economics, Econometrics and Finance › General Economics, Econometrics and Finance › Digital Transformation in Financial Services
  • Social Sciences › Business, Management and Accounting › Strategy and Management › Digital Platforms and Economics
  • Physical Sciences › Computer Science › Computer Science Applications › History of Computing Technologies
Keywords
Swift, interbank payments, telex, communities of practice, installed base, governance, membership categories

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