SWIFT announces "Open Network" initiative: seeking collaboration with Ethereum L2 Linea to address stablecoin impact and competition with Ripple.

The global interbank financial messaging network SWIFT is actively exploring modern solutions for instant cross-border payments and "no hidden fees" to address the fierce competition posed by stablecoins. Reports indicate that SWIFT is engaging with the Ethereum L2 network Linea built by ConsenSys to experiment with migrating its core messaging system on-chain for faster and cheaper settlements. SWIFT aims to tackle the issue where 80% of the latency in its network occurs in the "last mile." This move signifies a significant adaptation of traditional financial giants to blockchain technology, while also presenting new competitive challenges to Ripple, which has long positioned itself as a disruptor to SWIFT, (XRP).

The modernization goals of SWIFT: Instant payments and the "last mile"

SWIFT is responsible for the financial messaging transfers of over 11,000 partner banks globally, but its system has become complicated and inefficient due to compliance and "last mile" issues, resulting in retail remittances taking several days and being costly in certain channels.

· Plan details: SWIFT is trialing a brand new "open network" aimed at enabling fast, instant cross-border payments and promises "no hidden fees". If possible, it will also achieve instant domestic settlement.

· Pain Point Resolution: SWIFT has found that about 80% of the latency in its network occurs in the "last mile." Chief Commercial Officer Thierry Chilosi stated that this initiative will "enhance customer experience" and reiterated SWIFT's commitment to becoming an "open network."

· Industry Pressure: This transformation is taking place against the backdrop of stablecoins becoming the preferred choice for cross-border settlements, with many payment aggregators reporting significant growth achieved through stablecoins. Established payment companies, including MoneyGram, have also joined the ranks of those supporting stablecoins, forcing SWIFT to closely monitor this shift.

Blockchain Solution: Exploring Ethereum L2 Linea

In order to achieve the goal of instant, low-cost cross-border payments, SWIFT is exploring blockchain solutions, particularly migrating its messaging system on-chain.

· Potential collaboration: According to media reports from The Big Whale, SWIFT is exploring the migration of its messaging system to Linea (LINEA), a Layer 2 (L2) network built on Ethereum (ETH), in search of faster on-chain message transmission.

· Technical Transformation: Insiders from participating banks have disclosed that "the project will take several months to implement, but it signifies an important technical transformation for the international interbank payment industry." SWIFT is seeking to leverage the high efficiency and low cost of L2 networks to address the core latency issues of its system.

· Potential impact on ETH: If the network (most likely explored through Linea) is adopted, this will indirectly benefit the Ethereum ecosystem, as Linea relies on the security of the ETH mainnet.

The Competitive Landscape of SWIFT and Ripple

SWIFT's proactive transformation has brought new competitive pressure to its long-time disruptor Ripple (XRP).

· Advantages and Ambitions of Ripple: Ripple CEO Brad Garlinghouse recently stated that they have the capability to handle 14% of SWIFT's transaction volume by 2030. The average processing speed of the XRP Ledger is 1,500 TPS (transactions per second), which is more than three times the average of over 40 million messages (about 450 TPS) processed daily by SWIFT, and it is capable of on-chain payments.

· The core advantage of SWIFT: However, SWIFT has an unparalleled network effect, covering over 11,000 partner banks in more than 200 countries worldwide. Ripple has not yet reached such a global coverage.

· Competition intensifies: SWIFT's exploration of collaboration with Linea indicates its willingness to adopt the Blockchain technology relied upon by its competitors to address its own speed and cost disadvantages. This transforms the competition between SWIFT and Ripple from a traditional centralized system vs Blockchain disruptors to a showdown between traditional giants adopting Blockchain vs native Blockchain solutions.

Conclusion

SWIFT's exploration of migrating its messaging system to Ethereum L2 Linea is a profound self-reform of traditional financial infrastructure under the impact of stablecoins and blockchain. By addressing the efficiency issue of the "last mile", SWIFT is expected to combine its vast network effects with the speed and cost advantages of L2. This will undoubtedly intensify competition for blockchain projects focused on cross-border payments, such as Ripple. The future leader in cross-border payments will depend on who can most effectively combine global coverage, regulatory compliance, and cutting-edge technology to provide financial institutions with the most reliable and convenient solutions.

Disclaimer: This article is for news information and does not constitute any investment advice. The crypto market is highly volatile, and investors should make cautious decisions.