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Good post. The DTCC published quite a useful white paper in May in which they concluded that they couldn't afford not to move to the cloud, given the gap in security knowledge and capability. Having said that, particularly for smaller banks the complexity and impact on the current IT person/group shouldn't be underestimated. There is a good business opportunity for consultants who really understand a particular cloud platform (e.g. AWS), cybersecurity, and community banks or credit unions.

Carlo, thanks. This is a good, well-structured post, leading to at least as likely an outcome as any. There is a certain amount of arrogance about Ripple's stance that could come back to bite them. But a collaboration between SWIFT and Ripple would make sense if they can play nice together - they are radically different kinds of organization.

A few things to bear in mind:

1. SWIFT is a messaging system, not a payment settlement system. Settlement occurs through funding of nostro accounts.

2. SWIFT messaging covers more than just payments - FX contract confirmations, letters of credit, nostro statements, etc.

3. There is much more to SWIFT than a messaging infrastructure - the community, governance, standards body, etc are all needed in some form.

4. Adoption by a handful of banks (or even a few hundred) doesn't resolve the need for a truly global payments messaging infrastructure. Without a collaboration, there is a real market risk that enough volume will move from SWIFT to a blockchain-based alternative to make SWIFT unprofitable, while thousands of banks lack the resources to make the switch in the same timeframe - there could be a time during which there is no viable payment mechanism for smaller international banks. 

5. SWIFT has made a whole-scale technology transition before, when it moved to an X.25 based network. It was long and painful, but almost entirely without major problems. A move to a distributed ledger infrastructure is also eminently possible without major disruption.

My money is on SWIFT partnering with Ripple, Ethereum, or another consortium - partnership for transformation, not competition for disruption.

Some sparring is inevitable. In reality Ripple's experiments, while promising, are not valid comparisons even for end-to-end payment times (which is far from the only challenge - see my recent FinExtra post Is Blockchain Really the Answer to Global Payments?) The majority of SWIFT payments occur within 24 hours - and a good proportion within an hour or even minutes. Delays are typically caused not by the infrastructure, but by banking calendar mismatches, and incomplete or invalid payment instructions. Ripple has not yet proposed a solution to these - delivery of a smart contract doesn't ensure the beneficiary has use of the funds.

However, collaboration is essential if payments infrastructure is to be transformed. SWIFT won't be successful on its own, at least not in a timely manner. There are contributions to learning being made by many players - Ripple for sure, as well as R3, Hyperledger, and Ethereum. That Ripple are at SIBOS is good, and a little repartee increases bankers' awareness. They just need to not take it too far, and SWIFT need to avoid being too defensive.