Tom Alaerts, who spent more than 27 years at the global financial messaging network SWIFT, recently discussed the growing significance of ISO 20022 in connecting digital assets with traditional banking systems. Alaerts, recognized for his deep expertise in financial messaging standards, spoke in detail with Crypto Researcher SMQKE about how conventional banks and blockchain networks could work together in the future.
SWIFT’s continued role in international payments
Alaerts addressed the ongoing debate about whether blockchain networks could eventually replace SWIFT in the financial sector. He dismissed the idea that SWIFT is becoming obsolete and argued that the network’s enduring importance is supported by its longstanding reputation for trust, neutrality, security, and robust governance. According to Alaerts, these factors are highly valued by banks handling cross-border transactions worldwide.
He noted that SWIFT has adapted alongside advancements in global finance, referencing the Global Payments Innovation (GPI) service, which enables the majority of international payments to reach their destinations within 20 minutes. This evolution demonstrates how SWIFT is striving to remain relevant as payment systems advance.
Rather than expecting blockchain to take over traditional infrastructure, Alaerts suggested a hybrid model could prevail, where both legacy and blockchain-based systems operate side by side. He highlighted SWIFT’s ongoing experimentation with blockchain for uses such as liquidity management, signaling interest in emerging financial technology.
ISO 20022 as a bridge for digital assets
The discussion also focused on ISO 20022, a global standard for financial messaging. Alaerts emphasized that ISO 20022 functions as a universal business dictionary, which helps financial institutions understand and process payment data uniformly—regardless of whether the message is transmitted using XML, JSON, or other technologies.
He pointed out that modifications to the standard, introduced around 2022 and 2023, made it easier for digital assets to be represented within traditional securities messages. These updates enabled support for blockchain-specific features like digital token identifiers, precise numerical values, and blockchain addresses.
Improvements to ISO 20022 during this period allowed for digital asset details—such as token identifiers and blockchain addresses—to be incorporated directly into existing financial message structures. This made it possible for banks to begin processing such transactions without overhauling their current systems.
He explained that these integrations enable conventional banks to process transactions involving digital assets without the need to rebuild their entire back-office infrastructure, making the adoption process more practical for established institutions.
Mini dictionary: ISO 20022 is a standardized system for exchanging electronic data between financial institutions. It aims to create a consistent messaging format for payments, securities, and other asset transfers, making communication and integration between different financial systems more efficient.
Benefits for networks adopting ISO standards
Alaerts agreed with SMQKE that fintech firms and blockchain networks complying with ISO 20022 may find it easier to work with central banks and the SWIFT network. He explained that financial institutions normally conduct extensive security reviews, resilience testing, and regulatory checks before integrating new technologies.
By using established ISO terminology, fintechs can streamline integration and minimize these hurdles. Such networks can connect to existing banking infrastructure more smoothly, giving them an adoption advantage over those lacking compatibility.
Banks require strict due diligence and system validation before adopting new technology, so networks aligned with ISO 20022 can often connect to existing banking processes with fewer obstacles.
Alaerts also mentioned that banks involved in international settlements might not always need to interact directly with underlying blockchain networks, thanks to the compatibility delivered by standardized messaging systems.
Beyond messaging: wider uses of ISO 20022
Challenging the view that ISO 20022 is only about messaging, Alaerts explained that the standard also defines business processes and how information is interpreted by financial institutions. Its applications span application programming interfaces (APIs), asset settlements, and blockchain-based transactions.
For Crypto Researcher SMQKE and others tracking blockchain’s impact on finance, these insights reinforce the role that interoperability will play as banks and other institutions continue to explore the integration of digital assets.
Mini dictionary: SWIFT (Society for Worldwide Interbank Financial Telecommunication) is a cooperative founded in 1973 that provides secure messaging services for financial transactions between banks and other financial institutions worldwide. It is the backbone for cross-border payments in the global banking system.
