Westpac has become the second Australian bank to join a proof-of-concept by payment messaging service Swift that aims to test blockchain for facilitating cross-border payments.
It is one of 22 global banks to join the PoC today, adding to the six foundational banking participants, one of which is ANZ Bank.
It was always envisaged that a number of other banks would join the project to further validate the concept.
The project aims to prove whether or not banks can reconcile their international nostro accounts in real-time using blockchain technology.
Nostro accounts are those held by banks in other countries in the local currency and are used to settle foreign exchange transactions.
“Currently, banks cannot monitor their account positions in real time due to lack of intraday reporting coverage,” Swift said in a statement.
“As such, the PoC recognises the need for banks to receive real-time liquidity data in order to manage funds throughout the business day."
Westpac said in a statement it would combine Swift’s PoC effort with its “other cross-border payment PoCs”.
“This holds great promise for transformation across the entire international payments value chain," Westpac’s global transaction services general manager Di Challenor said.