Ripple fights for dominance over SWIFT
Ripples and Waves: Blockchains have become main-stream in the last five years, causing for firms to fight for dominance in the crypto space. However, there is one industry that is threatened by blockchains and that’s the financial sector. Blockchain firms are continually working on developing decentralized products that will replace traditional banking services, as the pace for new blockchain services grows, the financial sector gains more of a risk at losing substantial funds.
There has been one company that has been making the headlines for working directly with the financial sector. Ripple works primarily with banks to make faster and more secure online processing transactions. Blockchains introduced new security protocols that evade online criminals, with Ripple being one of the leaders of the blockchain security space. The company is currently developing an inter-bank money transfer system that will allow for NFC secured banking.
However, even with helping global banking systems, the San Francisco-established blockchain firm still threatens future dominance over the Society for Worldwide Interbank Financial Telecommunications. Unfortunately for Ripple, becoming the replacement services against SWIFT will be a difficult process.
The Dominance of SWIFT
First established in the spring of 1973, SWIFT has become the standardized process for global banks. American Express, in a report detailed that the key advantage for the SWIFT Network is that more than eleven thousand financial services in 200 countries use it globally. This has allowed for money to be transferred in practically every country on our planet.
During December of 2018, SWIFT has an increase of 10.4% from their prior time in 2017. They averaged 34.16 FIN Messages every day during December. This shows that the financial firm is nowhere near being out of the fight. However, the company does have some significant flaws such as the wire transferring service is slow, taking hours to potentially days for it to be approved. With new blockchain technologies built into SWIFT, that processing speed can be heightened dramatically.
Ripple to the Rescue
Ripple is here to save the day and fill in the gap created by Swift as the blockchain-firm is developing new blockchain specific solutions for global banks. The company recently revealed that it has now entered the fight by having more than two hundred global banks supporting RippleNet.
Ripple has created three solutions that will benefit banks, including xVia, xCurrent and xRapid. By having three different platforms, this firm has been able to storm into the financial sector at a high pace. One service, xRapid, focuses on transferring money across borders while xCurrent enables the banks themselves to instantly settle cross-border payments by using end-to-end encryption tracking. The standard payment system is xVia, allowing for corporations and banks to send payments across numerous networks. However, any banking institution wanting all three services can obtain a bundle on RippleNet.
Ripple used a new crypto currency called “XRP Tokens” to transfer funds at a guaranteed fast and safe speed. Brad Garlinghouse, the CEO of the blockchain firm, in an interview with Fortune Magazine stated, “Not many months ago, the media was saying no one will use XRP, which made for good sceptical headlines. Today, you can’t say that as people are starting to use XRapid because it’s better, faster and cheaper.”
The World Bank published a report on March 26, 2019 that addressed issues global banks have been having with cross-border payments. TWB stated that they have a firm belief in the decentralized ledger, with the official statement reading, “DLT-based cross-border payments potentially offer a promising pathway to dramatic improvements in the lives of millions of people in emerging economies. DLT could improve the traceability of remittances and reduce compliance costs for MTOs and supply chain payments, stimulating economic activity in destination countries.”
The World Bank, lender to global banks continued with the statement, reading, “In 2018, Ripple piloted xRapid, a DLT-based cross-border payments solution, along [with] the very competitive U.S.-Mexico corridor. Financial institutions involved in the pilot saved 40-70 percent in foreign exchange costs, and the average payment times was just over two minutes,” the global lender added. “The transfer of funds on xRapid took two to three seconds, with most of the processing time explained by domestic payment rails and intermediary digital asset exchanges.”
Swift’s response to the world banks issued statement was fast and severe, immediately they launched the “Global Payment Innovations”, an upgraded service that is meant to directly compete with Ripple’s. Swift’s GPI Solutions will allow for increased traceability, speed and transparency when it comes to online transactions.
Luckily, their fast response turned out to be a success for the Belgium-established financial firm as already 3,500 banks have agreed to adopt GPI. As of last week, there are already fifty-five financial infrastructures using GPI Payments, allowing these banks to have domestic and international tracking over funds.
Industry experts are more comfortable when using the GPI service but none can deny the impact that Ripple has been able to make in the payment transfer market. However, GPI isn’t true innovation for SWIFT. Instead it is an improvement on the prior services they offered. Transactions are still not as fast as on Ripples xRapid platform. The software still needs to be upgraded to XRP in order to truly compete with Ripple.
Industry insiders from all over have supported the Swift GPI platform. One company quick to jump on the new service was Cashaa, a London-established crypto-currency banking platform. Their CEO, Kumar Gaurav when speaking with Finance Magnates stated, “As SWIFT is the largest interbank network connected to almost every bank in the world, we are using it and working on optimizing the flow as much as possible. However, as a banking platform, we keep up with the latest and most advanced technologies which are able to move real money and therefore have been following Ripple closely over the past years.”
Swift is trying every solution they can to fight off the rise of blockchain technology. Earlier this year they introduced a decade-old technology as a proof of concept. The name of this concept is GPI Link and would act as a direct solution to centric-blockchains.
After the proof of concept was revealed publically, Swift stated: “We thoroughly assessed the technology and concluded that it was not yet mature enough for cross-border payments. We are continuing our R&D efforts to explore how and whether our users can benefit from Blockchain and are reviewing how DLT can enrich the features of SWIFT GPI.”
Regardless of what the company says publically, it is easy to see that the financial giant is threatened by the future of Ripple.