The interoperability imperative: how traditional payment networks and open protocols will (finally) work together

For over a decade, pundits have predicted that blockchain would kill legacy financial institutions. Some made it their mission. "Disrupt Swift." "Bypass the banks." "Make correspondent banking obsolete."

The ideas were seductive. The logic seemed airtight. Faster, cheaper, trustless, borderless—how could legacy tech compete?

But new technologies rarely obliterate what came before. Streaming didn't kill theaters. Mobile didn't kill desktop. The internet didn't end print.

The reality is always messier, and more interesting. New systems force the evolution of older ones while carving out their own distinct purpose. That pattern is now playing out in global finance.

This week at Davos, representatives from traditional payment networks and open blockchain protocols shared a stage—not to debate replacement, but to discuss coordination.

The question isn't (and shouldn’t be) whether established payment systems or emerging protocols will "win." The question is how they will work together to serve a global economy that increasingly demands both institutional accountability and universal access.

Consider the landscape: Swift connects more than 11,000 financial institutions across 200 countries. ACH processes billions of domestic transactions annually in the United States alone. Regional systems like SEPA in Europe and UPI in India serve hundreds of millions of users with remarkable efficiency.

Meanwhile, open blockchain networks are quietly processing growing volumes of cross-border value transfer—often in corridors underserved by traditional rails.

Each of these systems exists because it solves real problems for real users.

The trillion-dollar question isn't which one prevails. It's how we build the bridges between them.

At the most fundamental level, we're witnessing two different approaches to coordinating global value transfer: committee-based and code-based. Understanding both—their strengths and their limitations—is the strategic imperative of this decade.

Committee-based coordination works through representation. Standards emerge through negotiation. Bilateral agreements. Working groups. Consensus-building across sovereign institutions.

This is how Swift, ACH, SEPA, and others operate. Standards organizations, central banks, and correspondent banking networks have negotiated the rules over decades.

The strengths are real: accountability, governance, legal certainty, dispute resolution.

Code-based coordination works through execution. The protocol is the agreement. Compliance is computational, not contractual. Rules are encoded in software. Participation doesn't require negotiation.

The strengths are different but equally real: speed, accessibility, predictability, permissionless innovation.

For years, observers positioned these as competing visions. The blockchain industry, frankly, spent too much time talking about "disruption." That framing was always wrong.

Here's what's actually happening: code-based coordination is learning to encode the very properties that made committee-based coordination essential.

Accountability through on-chain records that no party can alter. Governance through protocol rules and foundation stewardship. Legal predictability through deterministic execution. Even dispute resolution—compliance-focused firms have built clawback functionality that satisfied regulatory requirements, encoded in protocol rather than negotiated in contracts.

And now privacy. Financial institutions know what they need: balance obfuscation so competitors can't infer each other's positions, transfer obfuscation so transaction volumes stay confidential, and tools for regulators to maintain oversight.

What's remarkable is that code can now help deliver all three simultaneously. That's convergence: compliant privacy solutions enabled by code.

This isn't about one approach being "better." It's about recognizing that code-based coordination can increasingly deliver what committee-based systems provide while maintaining permissionless access that committees structurally cannot offer.

Let me be clear about what committee-based coordination has achieved.

The coordination that an institution like Swift has built—connecting 11,000 institutions across more than 200 countries—didn't happen by accident. It represents decades of trust-building, standards development, and institutional alignment.

The same is true for domestic systems. ACH moves trillions of dollars annually within the United States with remarkable reliability. It's faster than many people assume, and for domestic transactions, it works extraordinarily well.

Regional systems like SEPA have transformed European payments. India's UPI has connected hundreds of millions of users who previously had limited access to formal payment systems.

These successes matter. Each system solved specific coordination problems for specific markets. Western correspondent banking networks optimized for certain corridors. Regional systems optimized for others. Domestic systems serve their communities with deep integration into local banking infrastructure.

Recent evolution signals recognition that the landscape is changing.

Blockchain experiments—including successful multi-bank token transfer pilots—aren't defensive moves. They're a strategic acknowledgment that new coordination mechanisms matter.

That's the posture of an institution thinking seriously about the future.

Institutions that have built critical payment networks have a responsibility that extends beyond their current users. They're stewards of coordination mechanisms that billions depend on. That stewardship includes asking: how do we bridge to what comes next?

In 2019, Franklin Templeton began building on open blockchain protocols—quietly. No partnership agreements. No vendor negotiations.

By the time they announced their tokenized fund, they had years of private validation. That's what permissionless infrastructure enables: the freedom to experiment at the protocol layer without asking a central gatekeeper. The regulatory layer is a different matter—Franklin Templeton still needed every license and approval required to operate a fund. But they didn't need anyone's permission to start building.

This pattern repeats across the industry. Standard Chartered building digital asset custody on open protocols. PayPal deploying stablecoins seeking guaranteed access that can't be revoked. MoneyGram implementing open standards once and gaining compatibility with dozens of wallet providers immediately.

Why does this matter? Open protocols don't just reduce counterparty risk—they eliminate the counterparty entirely. When a network treats everyone the same by design, every participant can depend on it.

That efficiency isn't available through committee-based coordination—not because committees are flawed, but because negotiated agreements inherently take time and create exclusivity.

The structural point isn't about which approach is superior. It's about which approach serves which need.

Institutional-grade privacy? Increasingly available through protocol.

Accountability and governance? Built into well-designed open systems.

Regulatory compliance? Firms are demonstrating that code can deliver what contracts traditionally required.

Code can deliver what committees coordinate. Major institutions want access to both.

Different rails serve different needs. That's not a bug in the system—it's a feature and the reflection of reality.

The global economy isn't uniform. Corridors vary in liquidity, regulatory complexity, and institutional trust.

For domestic payments in developed markets, existing rails often work remarkably well. Swift makes sense to continue to exist and to be successful in the areas where Swift excels. ACH serves its purpose. Regional systems optimize for their communities.

But the world has needs that no single system was designed to serve.

Remittance corridors where correspondent banking is expensive or unavailable. Markets where currency volatility makes traditional rails impractical. The emerging world of autonomous systems that execute transactions at machine speed—systems that can't pause for partnership agreements or wait for committee approval.

The strategic question isn't whether to build bridges between coordination mechanisms. The bridges are being built regardless. The question is whether established institutions will participate in building them or watch from the sidelines while the architecture takes shape without their input.

In order for any new technology to really take root and take hold, it has to be better than the old one—at least for specific use cases.

Open protocols aren't better at everything. But they're increasingly better at specific things: permissionless access, instant finality, global availability. Traditional rails are better at others: institutional trust, regulatory relationships, deep banking integration.

The winners won't be those who pick a side. They'll be those who recognize where coordination is converging and help build the connections.

I spent my first months at the Stellar Development Foundation on Capitol Hill because I'd learned at Mozilla that engaging regulators early prevents the kind of hostile environment that stifles innovation.

The same principle applies to incumbent institutions. The institutions that engage early with emerging coordination mechanisms—rather than waiting until market shifts force the question—will shape how bridging happens.

We're not building competing networks. We're building coordination mechanisms for a world that needs both institutional accountability and permissionless access.

Different transactions will use different rails, and that's exactly how it should be. Whichever rails make sense for a particular transaction should be chosen for that transaction.

The sooner we stop treating this as a zero-sum competition, the sooner we can focus on what matters: moving value safely, efficiently, and accessibly across a connected world.

Code-based coordination isn't here to replace what committees built. It's here to extend what's possible—to serve the users and corridors and use cases that existing systems weren't designed to reach.

The invitation to every established institution isn't to compete with that future. It's to help build it.

The coordination mechanisms of tomorrow will be built by those who show up today.