SWIFT Full Form

What is the full form of SWIFT?

SWIFT stands for "Society for Worldwide Interbank Financial Telecommunication." As the name suggests, it works in connecting two banks or financial institutions that are in two different countries. Mainly for the purpose of transferring information regarding transactions. It does not perform transfering of money or any other assets. So what would happen if Swift wasn't there? We can see the example of the Russia and Ukraine war of 2022. Some of the Russian banks were excluded from the SWIFT, which can initially make it tougher for them to communicate overseas, making the transaction late and costlier. In this article, we will further go deep into what is SWIFT transaction system is, and how it works, also looking at the SWIFT code of a few countries.

This Story also Contains

1. What is the full form of SWIFT?
2. Formation of SWIFT transaction system
3. How does SWIFT Work
4. SWIFT is Used By :
5. Uses of SWIFT
6. Advantages and Disadvantages of SWIFT

Formation of SWIFT transaction system

On 3rd May, 1973, SWIFT was officially set up in Belgium. 518 financial institutes from 22 different countries already joined hands with the transaction messaging service. It then in 1977, replaced the telex system which was previously used by banks.

Important person behind the formation of SWIFT

• Javier Perez-Tasso (CEO)

• Yawar Shah (Chairman)

Currently, it provides its service to 11,000 financial institutions in over 200 countries.

How does SWIFT Work

SWIFT performs an important service of notifying people when transfer of money is received or sent. It works by assigning a unique ID code that is also called a BIC number ( Bank Identifier Code).

So what is the use of a BIC number?

BIC number/code is 8-11 digit long, and is used to identify a specific bank name, location, and branch. The first 4 digits is the code of the bank, next 2 digits are different for every country, other 2 is known as location code, with the last 3 being the branch code if it has 11 digit BIC code. This code gives a unique identity to every bank or financial institute, making the messaging regarding transactions easy and fast.

SWIFT codes are generally written on the first page of the passbook, and are also available in bank's websites.

Below are general SWIFT code for few countries

SWIFT is Used By :

• Banks

• Dealers in Securities

• Companies that Manage Assets Depositories

• Corporations, foreign exchange providers, and money brokers

• Exchanges and Clearing Houses

• Participants and Service Providers in the Treasury Market

• Trading Houses and Brokerage Institutes.

Uses of SWIFT

• .Business Intelligence service offered

• Services of Compliance

• Applications

• Software, connectivity, and messaging solutions.

Advantages and Disadvantages of SWIFT

Below are some of the advantages and disadvantages of the SWIFT transaction system.