SWIFT means Society for Worldwide Interbank Financial Telecommunication. It supplies secure messaging services and interface software to wholesale financial entities.
To connect all the banks and financial institutions all over the world and establish a secure payment system and messaging system SWIFT was founded in Brussels in 1973, supported by 239 banks in 15 countries. It started to establish common standards for financial transactions and a shared data processing system and worldwide communications network. Fundamental operating procedures, rules for liability, etc., were established in 1975 and the first message was sent in 1977.
The SWIFT secure messaging network is run out of two redundant data centers, one in the United States and one in the Netherlands. These centers share information in near real-time. In case of a failure in one of the data centers, the other is able to handle the traffic of the complete network. Currently, SWIFT is building a third data center in Switzerland, which is scheduled to start operating in the second half of 2009. Once this is completed, data from European SWIFT members will no longer be mirrored to the US data center. Also called Distributed Architecture will partition messaging into two zones, the European messaging zone and the Trans-Atlantic messaging zone. European Zone messages will be stored in the Netherlands and in a part of the Switzerland operating center, Trans-Atlantic Zone messages will be stored in the US and in a part of the Switzerland operating center that is segregated from the European Zone messages. Countries outside of Europe were by default allocated to the Trans-Atlantic Zone but could choose to have their messages stored in the European Zone.
SWIFT moved to its current IP Network infrastructure, known as SWIFTNet, from 2001 to 2005, providing a total replacement of the previous X.25 infrastructure. The process involved the development of new protocols that facilitate efficient messaging, using existing and new message standards. The adopted technology chosen to develop the protocols was XML, where it now provides a wrapper around all messages legacy or contemporary. The communication protocols can be broken down into:
SWIFT moved to its current IP Network infrastructure, known as SWIFTNet, from 2001 to 2005, providing a total replacement of the previous X.25 infrastructure. The process involved the development of new protocols that facilitate efficient messaging, using existing and new message standards. The adopted technology chosen to develop the protocols was XML, where it now provides a wrapper around all messages legacy or contemporary. The communication protocols can be broken down into:
SWIFT operates a worldwide financial messaging network which exchanges messages between banks and other financial institutions. SWIFT also markets software and services to financial institutions, much of it for use on the SWIFTNet Network, and ISO 9362 bank identifier codes (BICs) are popularly known as "SWIFT codes". Almost all of the international interbank messages use the SWIFT network. SWIFT linked more than 9,000 financial institutions in 209 countries and territories, who were exchanging an average of over 15 million messages per day as of September 2010 . SWIFT transports financial messages in a highly secure way, but does not hold accounts for its members and does not perform any form of clearing or settlement. Here it does not facilitate funds transfer, rather, it sends payment orders, which must be settled via correspondent accounts that the institutions have with each other. Each financial institution, to exchange banking transactions, must have a banking relationship by either being a bank or affiliating itself with one (or more) so as to enjoy those particular business features.
SWIFT is a cooperative society under Belgian law and it is owned by its member financial institutions. SWIFT has offices around the world. SWIFT headquarters are located in La Hulpe, Belgium, near Brussels.
Swift Code
SWIFT code is a standard format of Bank Identifier Codes (BIC) and it is unique identification code for a particular bank. These codes are used when transferring money and messages between banks. The SWIFT code consists of 8 or 11 characters. When 8-digits code is given, it refers to the primary office.
- First 4 characters - bank code (only letters)
- Next 2 characters - ISO 3166-1 alpha-2 country code (only letters)
- Next 2 characters - location code (letters and digits) (passive participant will have "1" in the second character)
- Last 3 characters - branch code, optional ('XXX' for primary office) (letters and digits)