Reports in the Financial Times this week highlighted the increasing competition in the market as Ripple continues to add banks to its XCurrent blockchain messaging system. The company also launched a partnership earlier this year with Spain’s Banco Santander to develop a cross-border payments service based on XCurrent. More than 100 financial institutions (FIs) have signed up to use XCurrent, reports said.
Ripple Senior Vice President of Product Management Asheesh Birla said, “We are signing up a new financial institution as a customer every week.”
But as more banks invest in blockchain, to at least explore the technology for global payments, SWIFT — a 45-year-old leader in the payments messaging market — has stepped up its own competitive edge, reports said.
SWIFT head of banking Harry Newman said, “It is no secret that correspondent banking is a 1998 model and we are busy addressing that, bringing it to a 2018 model. But in terms of speed, what problems are you trying to fix? We have our own cloud and API solutions and are already doing payments in minutes or even seconds.”
Part of SWIFT’s efforts to improve speed and efficiency of global payments includes its Global Payments Innovation (GPI) initiative, which has 165 banks signed on for its service. According to reports, GPI now handles about 40 percent of payments in some cross-border corridors, including the U.S. and China.
Though efforts by Ripple and SWIFT to lead the cross-border payments market demonstrate rising competition in the industry, the rivalry also emphasizes the different paths that the cross-border payments space may take — one with blockchain, or one without.
“[Blockchain technology] is not straightforward to scale and it is not yet appropriate to do so,” Newman said. “All the announcements [by banks about their blockchain payments projects] made to date, they are either in-house or bilateral projects between banks. As you bring scale, you get escalating complexity.”