Introduction to SWIFT



The year was 1973, the world was changing rapidly. The United Kingdom, Denmark, and Ireland entered the European Economic Community, The first American prisoners of war were released from Vietnam, ‘The Exorcist premiered for the first time and the world of payments changed forever and for the better. Banks back then hand a big problem when trying to make international payments “Communication!!”.

Banks used a technology called TELEX (Telegraphic Exchange) which was a major method of transmitting written messages between businesses. It was basically a network of teleprinters that used telegraph-based connections. Think of TELEX like a texting service that we use today so commonly but using large machines. This was even before FAX became popular. TELEX was basically the latest version of the telegram that has been in use since the 19th century.

TELEX had several downsides. It was slow, there was no security and the worst part was that the receiver was not able to understand the instruction (aka payment messages). A lot of details got lost in translation. There was no universal standard for communication between banks. There were language barriers, time zone differences, human errors which all led to one thing – Change.

This change came in the form of a co-operative that decided to formulate and structure how financial information was shared between banks which would result in a revolution in the cross-border payments space that stood the test of time. In 1973, 239 banks from 15 countries joined hands to bring an end to this communication conundrum by forming SWIFT.

SWIFT stands for Society for Worldwide Interbank Financial Telecommunication and contrary to popular belief it is not a government body but a co-operative of banks. The headquarters was established in Belgium. In the next 4 years a messaging standard, a platform for exchanging these messages, and A powerful computer to route the messages were all put in place and the new system went live in 1977. This service that was offered by SWIFT was unlike anything that existed before. It was a game-changer in the financial world.

By the time it went live, the word was out and 518 intuitions from 22 countries were part of this network. Confidentiality, efficiency, security, and reliability were the main agenda so much so that 12 million transactions were processed during the first year in this new age wonder.

In the early 80s, the ‘SWIFT COMMUNITY’ expanded and the number of banks grew more than 1000 from 52 countries. The east, especially the APAC region joined the party.

90’s pushed the technological boundaries; the availability rate of the SWIFT network was close to 100 %. SWIFT as a community kept growing and stayed relevant throughout the years as it understood the market well, supported the community well, and was open to changes whenever necessary.

Today there are 11,000+ institutions that SWIFT connects and aids in the exchange of more than 8.4 billion messages. Truly a remarkable feat. 

At the timing of writing this article, SWIFT is gearing up for one of the largest changes in the history of financial messages. SWIFT has decided to let go of its proprietary messaging standards the “MT messages” and is now going to move to “MX messages” which is based on ISO20022. Standardizations are always difficult to execute that to envision. There should be a legitimate business reason for such a transition which we will explore further

Payment Education is now more relevant than ever and if you want to catch this train then “Now” is the time.  Personally, I like SWIFT MT messages a lot as it was the first payment standard I learned during my journey and so there is a sentimental connection to it.

This series of articles is my way of saying goodbye to MT messages plus I think it is critical to know MT messages well for us to understand the MT to MX transformation.

Happy reading.      

Blog Comments

Nice one..

Thank you

Thanks !!waiting next

Nice one.


Dhriti Mukherjee Pipil

Loved it. Payment industry is really dynamic.

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