What is the SWIFT network? History and role in finance

SWIFT (Society for Worldwide Interbank Financial Telecommunication) plays a central role in global finance, providing a secure, standardized network for international transactions between financial institutions. This messaging system handles over 42 million messages daily, covering everything from simple wire transfers to complex securities settlements across borders.

Let's walk through SWIFT's evolution from its 1973 founding to its current role in global finance, and its broader impact on international affairs, including its role in economic sanctions.

What is the SWIFT network?

Unlike systems that physically move money, SWIFT only transmits payment instructions between banks. The actual money movement happens through correspondent banking relationships or clearing systems.

Before SWIFT launched in 1973, international banks relied on TELEX for cross-border communications. TELEX had major problems:

• It was slow
• It lacked standardized message formats
• It offered minimal security

Banks had to process TELEX messages manually, which caused delays and increased error risks.

SWIFT changed this by introducing automated, standardized message formats with strong encryption and authentication. With SWIFT, international transactions became:

• Faster (typically 1–5 business days instead of several weeks with older systems)
• More secure through encryption
• More reliable thanks to universal standards that work across all financial institutions, regardless of location or internal systems

These improvements made cross-border transactions quicker, safer, and more dependable for businesses.

How does SWIFT work?

SWIFT connects over 11,000 financial institutions through a secure, standardized messaging system. When you send money internationally, this is how the process unfolds:

• Your bank creates a SWIFT message containing your transaction details, including account information and the payment amount
• This message is transmitted securely through the SWIFT network to the recipient's bank, providing instructions for completing the transaction
• The actual movement of funds occurs separately, through established correspondent banking relationships

Each bank in the SWIFT network is identified by a unique SWIFT code (also called a BIC—Bank Identifier Code). These 8–11 character codes are structured as follows:

• First 4 characters: bank code
• Next 2 characters: country codeFollowing 2: location code
• Final 3 (optional): specific branch code

For example, CHASUS33 identifies JPMorgan Chase in New York, USA.

When two banks don’t have a direct relationship, intermediary banks step in to complete the transfer. These intermediaries typically charge $10–$50 per transaction, which contributes to the higher cost of international transfers compared to domestic ones—and explains why recipients may receive slightly less than the original amount sent.

Ownership and governance of SWIFT

SWIFT’s global reach is matched by its unique ownership model, which maintains neutrality while serving the interests of financial institutions worldwide.

SWIFT operates as a member-owned cooperative under Belgian law. Over 2,000 financial institutions hold shares, with ownership determined by how much they use SWIFT services. This ensures that SWIFT remains focused on its users’ needs rather than outside shareholders.

Voting rights align with share ownership, meaning the most active participants have the greatest say in shaping SWIFT’s direction. In addition, central banks play an essential oversight role due to SWIFT’s critical importance to global financial stability. The G-10 central banks—including the Federal Reserve, European Central Bank, and Bank of England—form an Oversight Forum that monitors SWIFT’s risk management practices.

Day-to-day decisions are handled by a 25-member Board of Directors, elected from among the shareholders. This board represents a diverse mix of regions and financial institutions, and its major decisions must be approved at an annual shareholder meeting.

SWIFT’s cooperative structure strikes a balance between business interests and public policy concerns. It helps the organization remain independent and adaptive in the face of evolving regulatory, security, and financial challenges—ensuring it stays responsive to its global user base.

Who uses SWIFT?

SWIFT connects a wide range of financial players, making it central to global economic activity.

The network serves:

• Commercial and investment banks
• Securities brokers and dealers
• Asset management companies
• Clearing houses and depositories
• Exchanges and trading platforms
• Treasury market participants
• Corporations, especially multinationals
• Market infrastructures and data providers
• Payments and cash management providers

With over 11,000 institutions in more than 200 territories, SWIFT provides the secure infrastructure and common language that moves trillions of dollars across borders daily. This network effect has made SWIFT the standard for international financial communication and essential to the global economy.

What are SWIFT codes?

SWIFT codes are essential for identifying financial institutions during international transactions, ensuring funds are routed accurately to the correct bank. Also known as BICs (Bank Identifier Codes), SWIFT codes uniquely identify banks around the world. You'll need one anytime you send or receive money across borders.

A SWIFT code typically follows this format: AAAABBCCDDD. For example, CHASUS33XXX breaks down as:

• CHAS: Bank code (Chase)
• US: Country code (United States)
• 33: Location code (New York)
• XXX: Branch code (optional; identifies a specific branch)

To find the correct SWIFT code, you can:

• Check your bank statements or wire instructions
• Log into your online banking platform
• Visit your bank’s website
• Ask the recipient directly for their bank’s SWIFT code
• Use SWIFT’s online directory or your banking platform’s lookup tool

It’s important to always double-check SWIFT codes before sending funds. Incorrect codes can lead to payment delays, additional fees, or failed transactions.

By eliminating confusion over bank identification, SWIFT codes help reduce errors and ensure payments are routed through the most efficient channels. For businesses making frequent international transfers, this accuracy improves reliability and saves both time and money.

SWIFT's role in economic sanctions

SWIFT plays a critical role at the intersection of international finance and policy enforcement, making it an effective mechanism for implementing global sanctions.

Operating under Belgian law and primarily aligned with EU regulations, SWIFT enforces sanctions through a detailed compliance framework. It must also respond to U.S. sanctions pressures, particularly when EU and U.S. regulations align or when global coordination requires SWIFT to act, though SWIFT’s legal obligation is primarily under EU law. Dedicated compliance teams monitor global regulatory changes and assess which financial institutions should be restricted or disconnected from the network.

While impactful, SWIFT-related sanctions face certain limitations. They can exert significant economic pressure, but may also encourage targeted countries to explore or develop alternative financial systems. The success of these sanctions largely depends on broad international alignment; unilateral action can risk fragmenting the global financial landscape.

Additional services offered by SWIFT

Beyond messaging, SWIFT now offers a suite of technology solutions designed to support the evolving needs of financial institutions.

These services include:

• Business intelligence tools for analyzing transaction flows and market behavior
• Compliance utilities such as the KYC Registry, which standardizes customer information collection
• Fraud detection systems that monitor for suspicious activity in real time
• Anti-money laundering solutions that screen transactions against global watchlistsFlexible connectivity options, including dedicated links and API integrations
• Sanctions screening services that automate checks against global restrictions
• Financial crime compliance tools to support regulatory obligations
• Training and certification programs for financial industry professionals

These expanded services offer benefits such as:

• Institutions can lower compliance costs by up to 30–40% through standardized, shared resources
• Real-time fraud monitoring helps prevent financial losses and improves customer protection
• Data analytics convert transaction data into strategic insights, enabling better decision-making and operational efficiency

By broadening its capabilities, SWIFT now supports the entire transaction lifecycle—from initiation to compliance—helping institutions navigate complex regulations and improve operational resilience.

Common challenges facing SWIFT

As the financial industry evolves, SWIFT faces ongoing challenges that require continuous adaptation.

Key challenges include:

• Legacy infrastructure that must be upgraded to support real-time, always-on transaction processing
• Cybersecurity threats which expose vulnerabilities in user systems
• Batch processing cycles that lag behind growing demand for instant payment solutions
• Emerging blockchain alternatives that promise lower costs and faster settlements
• Competition from fintech firms offering niche solutions for specific payment routes

SWIFT’s response includes:

• SWIFT GPI, which has improved transaction speed and transparency, with over 60% of GPI payments settling within 30 minutes
• Strengthened security protocols, including mandatory controls and advanced threat detection
• An API-first strategy that supports greater integration flexibility for banks and fintechs.
• Exploration of blockchain solutions through pilot projects focused on standardization and interoperability

By combining innovation with its core strengths—security, standardization, and broad connectivity—SWIFT continues to evolve while maintaining its position as a trusted foundation for global banking.

Simplify SWIFT payment management with Ramp

SWIFT payments enable secure international transfers by facilitating messaging between banks. For businesses managing cross-border vendor payments, understanding how SWIFT works is key to ensuring funds arrive accurately and on time.

Ramp is a modern expense and spend management platform built to help businesses streamline every aspect of their payments, including international wire transfers. Through Ramp Bill Pay, you can initiate international wire transfers in U.S. dollars through the SWIFT network, giving you the control and transparency you need—without the hassle of managing payments across multiple platforms.

By automating approvals, syncing payments to your accounting system, and offering clear visibility into global spend, Ramp helps you simplify complex payments—without needing to juggle multiple systems or bank portals.

Whether you're paying vendors in the U.S. or abroad, Ramp helps you move money securely, efficiently, and all in one place.

Get started with Ramp Bill Pay.