The company seems to have become the go-to for payments for financial institutions and tech providers alike, with a number now working on pilots.
Speaking about Ripple’s dominance of the payments space last year to a senior officer at a tech company, Euromoney asked if there was a reason Ripple had been able to establish working relationships with so many banks and tech companies over and above other DL competitors. The response was “good marketing”.
Although this might play a part, it is slightly disingenuous. The company has focused its attention on payments, separating it from other DL providers that have looked to explore a wide variety of different use cases for the technology.
“The aim was not to be the new PayPal," he says. "We have shown the value of the service to the banks and finance companies of how our blockchain offering can help them to do business.
"Our clients are the banks and the payment service providers (PSPs). They use Ripple for cross-border payments, bypassing the traditional payments methods to send and receive funds in seconds."
Treacher adds: “We focus on creating real, workable products using our blockchain technology. Banks have specific challenges and we look to solve those problems. It is not just a question of creating hype – the products have to work and be productive.”
Standard Chartered has worked on two pilots with Ripple, developing TradeSafe to improve the security of trade-finance invoicing, and executing real-time cross-border payments with a correspondent bank.
Gautam Jain, global head, digitization and client access, transaction banking, at Standard Chartered, says: “When we first started looking at DL, we identified Ripple as the leading organization with a credible solution for cross-border payments. In addition to the technology, we believe that it has a competent management that is very focused on what they wanted to achieve.”
More recently, SEB was one of 10 banks announced as joining Ripple’s payments network.
Paula da Silva, head of transaction services at SEB,says the bank first spoke with the company in 2014, and found it offered the best service.
“There are still providers that are working out the process and deciding how to use it," she says. "Ripple is a good partner to work with. It can help us increase our competence and guide us through this process.”
The PSPs are approaching Ripple to work with the company directly, understanding which of their existing platforms will dovetail well with its DL technology.
|Neil Clarke, |
Neil Clarke, market engagement director at Volante Technologies, says: “We reached out to Ripple in early 2015. Our payments processing integration solution seemed like a complementary fit to assist in them achieving their objectives. After demonstrating our technology to their team, we began to collaborate, and performed a demonstration of how we can generically integrate with Ripple through our VolPay solution at Sibos that year.”
This ability to integrate has been an important factor in the rate of adoption. SEB's Da Silva says there “needs to be faith” that this new technology is interoperable with what is already established.
Ripple's Treacher explains: “Through one simple API integration, our network solution allows people and businesses to send money globally across any network instantly, reliably and at lower costs. Ripple is the only blockchain network with a standard rulebook and legal structures in place to govern payments.”
Da Silva adds it is not a one-stop solution, and this has meant bankers need to understand the technology being used to a degree that has not been experienced before.
“Ripple is a protocol that is accessible and easily used," she says. "However, it is not an end-to-end solution; it is not a plug-and-play solution through the whole value chain from customer to banks and back to the customer. For now there still needs to be connections and agreements between the banks – all the pain points have not been relieved yet.”
There now has to be more understanding from the bankers about the technology that is used.
Says Da Silva: “Ripple has been a part of the convergence of the tech and banking side of the business. In the past there was never a need for bankers to understand how the technology used for transactions worked."
Volante's Clarke says Ripple has worked closely with the banks and steering groups to understand what their pain points are and develop solutions accordingly.
“They have also been active in making efforts to speak to the regulators," he adds. "They’ve worked with people from the US regulatory bodies, and in countries where the banks are starting to use the technology.”
|Paula da Silva, SEB|
Although payments might have been covered off, there are still problem in other parts of the financial market infrastructure that the use of DL technology could alleviate.
Volante has worked with other providers, noting they offer something different.
Clarke says: “Ethereum has shown itself very applicable to a wide range of financial-service use cases and many projects have arisen on this blockchain-based platform.
“A key feature it offers is the use of coded smart contracts, where processes can be automatically executed based on a specific change in the nature of an asset held in the Ethereum chain.”
Similarly, BTL Group has been working on different areas of focus, taking in the energy sector as well as finance to find the best use for their technology. The group operates the private blockchain Interbit, which has been used to complete two phases of correspondent interbank settlements with Visa and six of their European partner banks.
Guy Halford-Thompson, co-founder and CEO of BTL Group, says: “In the energy sector we are focused on enabling clients to build on Interbit. We have built Interbit as a multi-chain, private but open blockchain platform specifically for enterprise.
"During a recent European energy pilot over the past few months, we have concentrated on trade confirmation. We are now able to enable clients on Interbit and support them to take advantage of Interbit’s ability to streamline these processes."
He adds: “We are aiming to have Interbit deployed in a live environment before the end of the year.”
Da Silva adds that although there has been progress, the work is not yet done on bringing together this new technology with the current banking environment.
“From the banking industry perspective, it is possible to understand how Ripple fits into the value chain and removes some existing issues, but we need to continue to create new eco-systems together,” she says.
While Ripple has covered the payments space, Da Silva says transaction services bankers are still looking for other companies to step up and help them to provide possible solutions to other issues they face.
“The trade-finance offering to customers would benefit even more from the blockchain technology and standardized protocols," she says. "The big issue to crack is how to reduce the length of processes and involve as many players in the ecosystems of shipment of goods such as freight carriers and others.
“SEB have started collaboration with other players through the DLG and R3 projects. This is unlikely to be a problem solved by Ripple. They are so focused on payments. It is very good that Ripple are focused on solving issues in the payment space and in expanding this value chain to make adoption even easier and scalable.”