There’s no surprise that Ripple is promoting the use of blockchain and distributed ledger technology among financial institutions. The company, after all, specializes in the space and is partnering with other FinTech players to unleash its Interledger Protocol tool to ease cross-border payments.
But in reports from CoinDesk published Tuesday (Feb. 23), Ripple pinpointed just how beneficial the blockchain could be for banks that adopt it for payments purposes.
According to the company, banks can save up to 42 percent when they use the Ripple network for cross-border payments processes. The statistic emerged from a new report by the company aimed at identifying the cost savings potential of the blockchain for financial institutions.
The firm also calculated that respondent banks can save up to 33 percent on global payments, thanks to a reduction in liquidity cost, payment operations and compliance costs.
Ripple found that banks can benefit by a 99 percent reduction in Basel III compliance costs, for instance, according to reports.
Reports also pointed to the unusual focus on XRP, a digital currency used for trading through the Ripple distributed ledger technology system. According to Ripple, its technology allows banks to hold liquidity in a single XRP account, instead of holding accounts around the globe. “This singular XRP pool then allows respondent banks to allocate less total liquidity to service the same volume of international payments,” the paper explained.
It’s a process that also cuts down on intermediaries in cross-border payments, reports added. For banks that use XRP as a “bridge currency,” reports said, they can realize as much as 42 percent cost savings — a figure likely to rise alongside increased use of XRP.