Leading Banks In Using Ripple Blockchain Value Its Speed
(As featured in Forbes- November 1, 2o17)
Written by: Tom Groenfeldt
Ripple used its own parallel Swell event at Swift’s Sibos conference to begin answering the questions of what the company is up to, and is it for real. Its program combined shock and awe — former Fed chairman Ben Bernanke in a chat with Gene Sperling, national economic advisor under two presidents, Sir Tim Berners-Lee, the Steve Miller Band — with more mundane but pointed content from traditional payment users and Ripple pioneers.
Ahead of Sibos Ripple had announced that more than 100 financial institutions, including Credit Agricole, Currencies Direct, RAKBANK and TransferGo, had joined its enterprise blockchain network, RippleNet.
During a panel at Swell, a Ripple event held about a mile from the Toronto convention center where Sibos was running, several Ripple users described their experiences with the company’s blockchain for payments.
Richard Bell, blockchain innovation lead at Santander, said banks in London were offering international payments that would settle in 8 to 14 days.
“That was quite incredible in 2015,” he noted. Users couldn’t be sure how much they would receive after fees, and fintech companies were active in offering better service. The bank launched a Ripple iOS payment service for Apple phones to 9,000 employees across Europe, allowing them to pay with British pounds or US dollars. They could tell in advance how much a transaction would cost and when it would arrive, which was either same day or next day.
Employees were quickly using it to pay mortgages in foreign accounts; one got a speeding ticket in Italy and was able to pay it immediately.
“When we tried to close the pilot there was a lot of opposition,” he said. The bank received an award from Accenture for the project. After the pilot, the bank spent three months investigating the Ripple stack for compliance, account controls, scalability and information security. In January it decided to move ahead and is now using Ripple in four major markets for retail, corporate and wholesale payments.
SBI Remit, part of the SoftBank group in Japan, partnered with Ripple in January 2016, creating SBI Ripple Asia to improve remittance payments, starting with Siam Bank in Thailand to serve the estimated 40,000 Thais living in Japan.
Nobuo Ando, representative director of SBI Remit, said that with its aging population Japan will need more foreign workers.
“Foreign-born people in Japan is around 1.2 percent while in Europe it is 13 to 14 percent.” The country’s foreign born population is too small for its labor requirements, he said.
“Foreign people sending money home want to send it safely, speedily and economically. Banks are difficult for foreign people to step into, and banks cannot make money out of it.”
SBI Remit started with 43 transactions in December 2016, its first month, and now handles 143,000 transactions per month. He expects the number of foreign-born will increase and with it the remittance business. The company plans to launch next in Korea.
“Ripple is lightning quick, six to seven seconds to settle.”
On the other side of the globe, SEB in the Nordics is using Ripple’s blockchain to speed corporate payments from Sweden to New York. Paula da Silva, head of transaction services at the bank, said the bank started to explore blockchain with Ripple in 2014.
“Once it became clear that bitcoin and blockchain were not the same thing, it was an easier ride,” she said.
The bank was alarmed when the first payment simply disappeared for 30 minutes, she recounted.
“We couldn’t understand what had happened, but it turned out to be a bug in our AML system which we had never previously discovered because payments took days or weeks. With Ripple the payments are now down to nine seconds” once the AML bug was fixed.
More customers want to move to the blockchain but the bank has to figure out how to migrate off its legacy systems so it isn’t running a parallel platform any longer than necessary.
Collaboration with Ripple was fantastic, she added.
In India, YES Bank is working with Ripple on in-bound remittances from North America, the Middle East and the UK.
According to the World Bank, Indian migrants send home about $70 billion a year, said Dharmesh Desai, group EVP at the bank. The remittances are individual retail payments, mostly for family maintenance.
Typically payments take three or four days to reach India. Payments on a weekend can take two days more, a hardship if an Indian family has an emergency on a Saturday. India has had instant clearing for three years, so once a payment arrives it moves to the recipient immediately.
YES Bank is working with regulators to make clear that blockchain is not the same as crypto currency, added Desai who had a meeting with regulators scheduled for the week after Sibos. He expects it will be two or three years before regulators take a position on crypto currencies. Meanwhile banks can find a good value proposition to start with blockchain without getting into crypto currencies. Cross border payments have to deal with two banks and two regulators, he added. That can take time.
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