In today’s fast-paced world, having a swift method of making and receiving cross-border payments is essential. This is why it is essential to understand how the SWIFT banking system is helping facilitate money transfers easier and faster around the world.
What is the SWIFT banking system?
SWIFT stands for Society for Worldwide Interbank Financial Telecommunications. Contrary to what many people think, it is not really a banking system; it’s a massive ‘messaging’ network, because it does not hold or transfer any money. It is only a channel that financial institutions use to send and receive data, including instructions for money transfers.
Governing the central banks of G-10 countries together with the European Central Bank.
One objective of SWIFT is to meet the changing global financial requirements. With e-commerce and remote working taking over the globe, the system has become even more important. With many things now that have become digitally driven, people need fast and reliable channels of international transfers.
According to statistics, nearly 50 million SWIFT payment messages were handled daily by the end of 2022. Meanwhile, the U.S. dollar and euro accounted for 70 percent of all payments made via SWIFT globally in 2023.
How SWIFT works
SWIFT operates by transmitting messages that include transaction details (including account numbers, transaction amount, currency and beneficiary information) and any other special instruction among financial institutions. These messages are exchanged using a standardized format to guarantee compatibility across various systems and institutions.
Members of the SWIFT banking system communicate transaction orders between institutions using the so-called SWIFT codes. These codes, composed of either 8 or 11 characters, are unique to every financial institution that uses the network. The general format is as follows:
- The first four characters are the code for the financial institution
- The fifth and sixth characters represent the country where the financial institution is located
- The seventh and eighth characters refer to the city where the financial institution is based
- The ninth, tenth and eleventh characters, which are optional, are codes representing the branch of the financial institution
- Please note that SWIFT codes can vary per branch. Just contact your bank and they will gladly provide the code.
| Bank name | SWIFT code |
| Abu Dhabi Commercial Bank (ADCB) | ADCBAEAA |
| Abu Dhabi Islamic Bank | ABDIAEAD |
| Central Bank of the United Arab Emirates | CBAUAEAB |
| Commercial Bank of Dubai (CBD) | CBDUAEAD |
| Dubai Islamic Bank | DUIBAEAD |
| Emirates NBD | EBILAEAD |
| First Abu Dhabi Bank | NBADAEAA |
| Mashreq Bank | BOMLAEAD |
| National Bank of Fujairah | NBFUAEAF |
| National Bank of Ras Al-Khaimah (RAKBANK) | NRAKAEAK |
How to transfer money via SWIFT
One of the major advantages of using SWIFT is enhanced speed and efficiency of communication among financial institutions. This means you can complete international transactions faster than other options (e.g., wire transfers). With safeguards in place, such as verification and encryption, you can also rest assured that your information is well-protected.
Now, how do you make payments via the SWIFT banking system?
Step 1: Gather all required information
Before you initiate a transaction using SWIFT, you must have or know the following:
- Details of the recipient’s bank (including bank name, address, SWIFT code, and account number)
- Transaction amount and currency
- Purpose of transfer (is it for purchasing an item or repaying a loan?)
- Identification requirements (including your passport or driver’s license)
Additionally, you must ensure that you have enough funds to cover the payment, plus transaction fees. For transaction fees, you have three options. You can cover all fees, have the beneficiary shoulder them or have the fees shared between both parties.
Step 2: Initiate the transaction
Once you get all these details, it’s now time to contact your bank (or any other financial institution) and provide them with the transaction information they need. You will need to fill out a form. When doing so, ensure that input error-free information to avoid any delays and other potential issues.
Step 3: Pay and confirm
After filling out the form, your bank can now facilitate the transfer to your intended recipient, utilizing SWIFT messages. After the transfer, your bank will verify the transaction. While the confirmation can take anywhere from a few hours to several days, this timeframe is generally faster than other international transfer methods.
Final thoughts
Living up to its acronym, the SWIFT banking system (Society for Worldwide Interbank Financial Telecommunication) is critical in enabling swift and secure cross-border payments. And with over 11,00 member institutions across more than 200 countries, the SWIFT’s network ensures extensive global coverage — keeping today’s financial landscape more connected than ever.
For more banking and finance stories, click here.
