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Origins and development of SWIFT, 1973--2009

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  • Susan V. Scott
  • Markos Zachariadis

Abstract

Research in this article traces the origins of a not-for-profit financial institution called the Society for Worldwide Interbank Financial Telecommunication (SWIFT). SWIFT is a core part of the financial services infrastructure and is widely regarded as the most secure trusted third party network in the world, serving 200 countries with over 8000 users. The analysis focuses on how the design and current state of SWIFT was influenced by its historical origins. In order to ensure widespread compatibility in a sector experiencing asynchronous technological development, legacy Telex specifications had to be accommodated in SWIFT's design. Over time, what began as a closed ‘society’ founded to reduce errors and increase efficiency in interbank payments grew into an industry cooperative supporting an enthusiastic community of practice and transformed into an unexpected network phenomenon. SWIFT achieved such success that it has been accused of being an installed base stifling innovation. In recent years, SWIFT has had to institute new categories of membership in an effort to counter concerns about its bank-dominated governance and it continues to search for ways to meet the requirements of key constituents in the financial supply chain.

Suggested Citation

  • Susan V. Scott & Markos Zachariadis, 2012. "Origins and development of SWIFT, 1973--2009," Business History, Taylor & Francis Journals, vol. 54(3), pages 462-482, June.
    • Handle: RePEc:taf:bushst:v:54:y:2012:i:3:p:462-482
    DOI: 10.1080/00076791.2011.638502
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    References listed on IDEAS

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    1. Jonathan Liebena & Tanai Khiaonarong, 2009. "Banking on Innovation," Contributions to Economics, Springer, number 978-3-7908-2333-2.
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    Cited by:

    1. Bernardo Bátiz-Lazo, 2017. "Between Novelty and Fashion: Risk Management and the Adoption of Computers in Retail Banking," Palgrave Studies in the History of Finance, in: Korinna Schönhärl (ed.), Decision Taking, Confidence and Risk Management in Banks from Early Modernity to the 20th Century, pages 189-207, Palgrave Macmillan.
    2. Marco Cipriani & Linda S. Goldberg & Gabriele La Spada, 2023. "Financial Sanctions, SWIFT, and the Architecture of the International Payments System," Staff Reports 1047, Federal Reserve Bank of New York.
    3. Louis Cousin & Luc K. Audebrand, 2023. "Cooperative associations: frameworks of distributed leadership for collective digital innovation," Post-Print hal-04292962, HAL.
    4. Scott, Susan V. & Van Reenen, John & Zachariadis, Markos, 2017. "The long-term effect of digital innovation on bank performance: An empirical study of SWIFT adoption in financial services," Research Policy, Elsevier, vol. 46(5), pages 984-1004.

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    1. Scott, Susan V. & Zachariadis, Markos, 2012. "Origins and development of SWIFT, 1973–2009," LSE Research Online Documents on Economics 46490, London School of Economics and Political Science, LSE Library.
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