Tom Lee Clowns Big Banks for Using SWIFT, Praises Blockchain DLT Alternative
Tom Lee Criticizes Banks For Using SWIFT
Blockchain technology certainly has the potential to replace the existing methods of accounting and payment processing. The capacity to eliminate human errors makes this technology appealing to companies in the financial sector. The adoption of digital currencies and blockchain technology, however, has been difficult for banking institutions and governments because of the complexity of regulations.
Still, many companies are integrating blockchain technology into their platforms despite the numerous challenges. Ripple is among the most prominent companies in the financial world that are committed to the blockchain. Recently, Ripple organized a convention on blockchain tech known as Swell. During the meeting, representatives of several leading banks and payment processors discussed their expectations on the use of blockchain in their field of work.
The dominance of SWIFT as the preferred interbank transfer mechanism was among the issues discussed by the panel. In this regard, one of the panellists noted that SWIFT has a standard error margin that sometimes exceeds 10% due to the reliance on an outdated messaging system. In response to this statement, Tom Lee, the CEO of Fundstrat, mocked the SWIFT platform by comparing to the abacus. Specifically, Lee said that he was shocked by the huge error margins on the SWIFT. He further added that such errors could cause liquidity problems for financial institutions if experienced for prolonged periods.
In their defense, the bankers, through Marcelo Yared of Banco de Brasil, said that they use SWIFT due to the absence of an effective and proven alternative. Precisely, Marcelo mentioned that developers have to convince the bank that a newer platform is worth trying before they can abandon SWIFT. Nonetheless, he acknowledged that distributed ledger technology is worth exploring for the facilitation of cross-border payments.
The position adopted by central banks is understandable. This is because the stability of the global finance ecosystem is dependent on multiple factors. Therefore, newer developments usually have to be thoroughly tested before they are implemented. Furthermore, the banks have expressed their willingness to explore blockchain tech, which in itself a significant step towards the full deployment of the tech.