SWIFT is a facet of the traditional financial system, facilitating international payments and payouts. The SWIFT network is most often used by a wide range of organizations, from large banks and corporations to small businesses.
Fintech is a newer addition to the financial world. Fintech companies often build their own financial network that provide similar services. This is an effort to help reduce the red tape involved and improve the settlement times for transactions.
But sometimes, these two different systems need to work together to take advantage of their strengths. The traditional financial systems usually have a farther reach, and have a larger number of users. Fintech companies have unique product offerings that are tailored to their customer base, and are often more lean and efficient when compared to traditional finance.
When fintech networks integrate with the larger traditional financial system, it can allow a wider base of customers to create payments and payouts that have the widest reach and the fastest settlements with the least amount of compliance issues. The two types of financial networks can work together to form a greater whole.
What is SWIFT?
SWIFT or the Society for Worldwide Interbank Financial Telecommunication is an important element of the traditional financial system. SWIFT is a network of financial institutions that facilitate cross-border payments and disbursements. It is the main system used for international payments and payouts between countries.
An important data standard, called ISO 20022, is used to standardize financial information that is used for a transaction. This enables a uniform system that can be used by financial institutions across the globe. Another important element of the SWIFT system is the BIC SWIFT code. The BIC (Business Identifier Code) is used to identify financial institutions and businesses when making a transaction. Including the BIC in the payment or payout request ensures that the transaction is routed to the correct beneficiary bank or beneficiary business.
Rapyd and SWIFT
Rapyd offers a payout method type through SWIFT using the Rapyd API. You can call the Rapyd API to use the xx_swift_bank payout method and create a cross-border payout using SWIFT.
The user documentation for SWIFT payouts includes information about regex, workflows, supported sender currencies, and required fields by country that are needed to create a SWIFT payout. Examples of a SWIFT payout are included. Additional information about purpose codes are included. Purpose codes are required for specific countries.
Fintech and Traditional Finance Working Together
Fintech and traditional finance are like two sides of the same coin. Both systems share some similarities and differences. When fintech becomes integrated with traditional financial systems, this allows you to experience the greatest benefits by having increased options, decreased settlements times, and a secure, reliable way to disburse funds across the globe. When fintech services become integrated with traditional financial services, a unified financial network is created that can best meet your financial needs.