TLDR
- SWIFT continues to dominate global payments due to its widespread adoption and legacy infrastructure.
- Many banks still rely on outdated systems like IBM z/OS mainframes and COBOL-based platforms for core operations.
- Replacing core banking systems is a costly and lengthy process, taking up to seven years and requiring massive investments.
- Banks often opt to layer modern technologies over legacy systems instead of fully replacing them with newer solutions.
- Ripple’s blockchain-based technology offers faster, more transparent transactions but faces significant adoption challenges.
SWIFT, the 1977 messaging system, still dominates global banking despite advances in digital payment technologies. Although Ripple (XRP) offers a modern alternative, it has struggled to gain widespread adoption. Vincent Van Code, a software engineer, highlights the challenges facing the transition from SWIFT to newer systems.
Core System Overhauls Keep SWIFT at the Forefront
Vincent Van Code points out that many banks continue to rely on outdated systems, such as IBM z/OS mainframes and COBOL-based platforms. These systems form the backbone of global finance and are crucial to operations in large financial institutions. SWIFT benefits from this legacy, remaining the default for cross-border payments due to its widespread adoption.
🧐🔥 Most Banks Are Running on 1970s and 1980s Technology—No Wonder SWIFT Hasn’t Been Replaced
So why hasn’t Ripple been adopted yet? Why is SWIFT’s market share so protected? Behind polished banking apps, the global financial system runs on mainframes and COBOL code from the…
— Vincent Van Code (@vincent_vancode) September 2, 2025
The vast majority of banks continue using SWIFT because they are deeply embedded in these older systems. Replacing or overhauling core banking infrastructure would require years of work and enormous costs. Van Code explains that core system overhauls typically take five to seven years and can cost hundreds of millions of dollars.
As a result, banks tend to layer modern technologies like APIs and middleware over their existing infrastructure rather than fully replacing it. These updates are often seen as temporary fixes rather than true solutions. Consequently, SWIFT continues to dominate because it is the most stable and widely accepted option available.
Ripple’s Challenges in Gaining Adoption
While Ripple’s On-Demand Liquidity (ODL) product offers a faster, more transparent alternative, widespread adoption remains a challenge. Ripple’s blockchain-based technology promises instant settlement and reduced reconciliation costs. Yet, it faces significant hurdles in integration with outdated banking systems that still rely on legacy infrastructures like COBOL.
Ripple must navigate a complicated and fragmented regulatory landscape, which adds complexity to its adoption. Additionally, Ripple faces skepticism from a highly risk-averse industry that is reluctant to overhaul long-established systems. Even as XRP liquidity grows, its perception as a volatile asset remains a barrier for many financial institutions.
Despite these challenges, Ripple offers a compelling alternative, with potential to reduce liquidity costs and enhance payment transparency. The question remains whether banks are ready to adopt such transformative technology when their current systems are entrenched. While Ripple continues to grow, SWIFT’s dominance remains due to its vast network effect.
Banks Reluctant to Replace Legacy Systems
The future of SWIFT and Ripple is shaped by the banking sector’s reluctance to embrace change. Banks are hesitant to replace their decades-old legacy systems. For Ripple to gain widespread adoption, it must convince the industry of the value it offers over the entrenched SWIFT infrastructure.
Van Code concludes that SWIFT’s global network effect shields it from easy replacement. It’s unlikely that Ripple will fully replace SWIFT in the near future. Instead, Ripple’s best strategy may be to complement SWIFT, offering new solutions while navigating the complexities of a heavily regulated and conservative banking industry.
