A banking system works on information and the exchange of data both inner and inter bank. An important factor in inter bank communication is security and reliability which depends on having common standards. The main method that banks use to communicate worldwide is SWIFT, an acronym for Society for Worldwide Interbank Financial Telecommunication.

The SWIFT system is long-established having been set up in Brussels in 1973. It is a co-operative established by and for the financial industry. SWIFT was originally sponsored by 239 banks in 15 countries. As of December 2007, SWIFT linked 8332 financial institutions in 208 countries around the world. Currently, some 90% of banks around the world use the SWIFT network to make international bank transfers.

The SWIFT computer system allows banks to exchange internationally recognized messages that indicate credited amounts and authorize debits. Using messages sent using the SWIFT system, banks can exchange data for funds transfer between financial institutions. The result is lower costs, lower risk and greater operational efficiency.

The system works by issuing each participating financial institution an ISO 9362 code, also called a Bank Identifier Code (BIC) or SWIFT Code which are usually eight characters long. Extended codes of 11 characters allow the message to be routed to a specific branch of the bank.

It's important to bear in mind that the SWIFT system only transmits a message. For the transaction to be successful, the receiving bank must have an account at the head office of the issuing institution. Only then can an interbank transfer be made.