Tom Zschach: The Swift Ledger Is Live And Banks Are Already Using It (Faster Than Anyone Expected)

Andy (0:00)

Well, Tom, welcome to The Rollup, it's your first time on.

Tom Zschach (0:02)

First time. I love it. First time for everything. Absolutely. Good to see you and I love what you guys do, so I'm happy to be here.

Andy (0:08)

Thank you so much. It's an absolute pleasure.

I mean, you're a legend of the game, someone who was firmly in the TradFi world and being a spokesperson from the inside. So maybe you could just explain, you were at Swift and here we are at CYBOS. You were CIO at Swift and you were there for six years. So maybe you could just tell us what happened over those six years that ultimately got you from where you started to where you were when you left.

Tom Zschach (0:37)

Yeah. I mean, it was a great run and a great time. The timing was perfect. So super support from Javier and the executive team, really to figure out how to change the industry, how to set the strategy. And how to continue to do more for the members. One of the things that's fantastic about Cybos is it's really a community show. It's an event for the industry. It's not a Swift event, it's an event for the industry. You see that by the people who show up here. So I mean, previous Cybos, we had a lot to do. Our team had a lot to do, and a lot of work on production and innovation really became really a prominent part of the show, which was fantastic.

But it really, I think it's just kind of a convergence of a dedicated management team that always wants to do more for their community and for their customers. A regulatory background that shifted fairly quickly, especially in the US., but then as a catalyst for other parts of the world, meaning the world's a big place. But also just customer demand.

And we saw real evidence where there's progress being made, not only in the technology, but in demand for like a digital money. So if you think about kind of the time that I was at Swift, nobody thought about carrying a token over the Swift network three years ago, right? So that was the job of innovation, was to like help define what could be, and then work with our members and use the convening power we had at Swift to prove it, improve the demand, and get something done. And I have to say the Swift team did an amazing job, not only just, you know, it was a year ago in Frankfurt where we announced the ledger, right, and that was a big event and a big announcement, but they also announced the payment scheme, right? So in terms of how it fits in, you know, they're going to continue, so it's going to continue to make payments as we have them today better. And they've had great success with the scheme program, that rolled out, was announced, it kind of rolled out in conjunction. So kind of two big victories for Swift and for the community with the launch of Ledger.

Andy (2:39)

Yeah, and I think the market has validated both your forward thinking and Swift's launches that have taken place over the last couple of years. Because I think it is now not if, it's when, and the industry is accelerating in this direction. And so maybe you could kind of unpack Swift Ledger. For anyone who's unfamiliar, what does it do, what does it not do?

People hear about Swift and broadly institutions entering the space. But help us understand what is real about the Swift Ledger.

Tom Zschach (3:11)

So something that's always important is to be really clear about what Swift is. Swift is a network where the corresponding banking business model, along with other business models, runs on the network.

Andy (3:24)

And for anyone who's unfamiliar with correspondent banking, how does that differ from traditional banking?

Tom Zschach (3:29)

Well, it's obviously a form of banking, but it's primarily focused on large value payments, on financial institutions and market infrastructures and corporates and of course banks.

And it's the way in which payments are made across border for large value payments. And I like to say that $50 is not $50 million, right? If you went to a corporate treasurer and you said, hey, I got something that's faster and cheaper and it works most of the time, they'll smile like you did, right? They're like, well, when you get it to work, come back and talk to me. So when you get into corresponding banking, it's all about certainty. It's all about compliance.

You can't transact with somebody in another country, cross border and then hope that it's compliant. It has to be compliant. You have to know what happens when something goes wrong. That doesn't happen much, but when it does, you need to know what are the rules? How do we do this? Then you have to do it in a standardized way. Swift connects 200 countries and I think Javier said yesterday, 40,000 plus corridors. You need that standardization and that robustness in the network to be able to run the large value payments that go across Swift.