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Can Ripple Challenge SWIFT gpi’s Monopoly?

Hundreds of thousands of payments, representing nearly 10% of SWIFT’s cross-border payments traffic, are being sent daily across 220 international payment corridors
SWIFT gpi is a network of banks whereas Ripple technology is sold as a product to individual banks.SWIFT gpi is a network of banks whereas Ripple technology is sold as a product to individual banks.

SWIFT gpi has taken the correspondent banking world by storm with about 11,000 banks in the SWIFT network. However, Ripple is said to offer superior technology and data to SWIFT. While many argue it is not a case of SWIFT versus Ripple, but a matter of which technology better serves clients, others seem to decisively take sides.

Ripple is adding high profile banks to its roster of clients at some speed as it promises to create an ‘internet of value’ in the payments world. There are even rumors that it will partner with Amazon, Victoria Beckett wrote for GTNews.

Meanwhile SWIFT released an update, SWIFT global payments innovation, or gpi, in February 2017, which has taken the correspondent banking world by storm. It now has about 11,000 banks in the SWIFT network–a reach that no other payments network can offer.

Banks such as Standard Chartered, Santander and Swedish SEB bank are proud users of blockchain payments technology Ripple and SWIFT. While both companies offer enhanced cross-border payment capabilities, they both deny that they are direct competitors.

Albert Maasland, CEO of Crown Agents Bank–a global transaction bank for emerging markets, says that SWIFT gpi and Ripple are “obviously two key players”, in the cross-border payments space. “Ripple may well gain a lot more traction. It has gained a lot of attention but has not been properly tested yet,” he told GTNews.

However, he adds: “It would be foolish to disregard SWIFT gpi. They are in a good position if they continue to develop. We see our role as supporting different initiatives. It is not about supporting only one.”

Of course, it is important to remember that neither Ripple nor SWIFT are one-time projects. Both are planning future releases and many banks and corporates are working together to produce SWIFT’s future roadmap.

David Versus Goliath

It can be very enticing to create a ‘David versus Goliath’ narrative around SWIFT gpi and Ripple, but this isn’t exactly the case, says Shirish Wadivkar, global head of corresponding banking products, Standard Chartered.

“In reality, the two providers are offering different approaches to the market, and there are benefits to be derived from both,” he argues. “The competition is also far from binary, with a multitude of payment companies becoming increasingly innovative.”

“Neither the corporates nor the banks are in love with any particular technology. We are all more interested in solving the issues with international payments,” Wadivkar told GTNews.

Standard Chartered uses both Ripple and SWIFT. BNP Paribas has been very vocal in its support of SWIFT gpi but is also exploring blockchain-based payment technology.

Damien Godderis, senior product manager, international payments and correspondent network, BNP Paribas Cash Management, says the two companies are competitors in some cases, but not in others. There are some key differences, for example, SWIFT gpi is a network of banks whereas Ripple technology is sold as a product to individual banks.

Marcus Treacher, senior vice president of customer success at Ripple, told GTNews: “SWIFT doesn’t really compete with Ripple in our view. SWIFT gpi has been around for a long time and it is making the SWIFT process a little less painful by adding more messaging and control into a 20th-century model.”

He argues that Ripple is doing something different. “We are thinking about how money moves in a very different way. We are creating an internet of value.

“SWIFT gpi will improve things a little bit but it won’t really match the speed, efficiency and visibility that we create with the Ripple network, so we don’t look at them as a serious long-term competitor.

Treacher argues that Ripple is the only market player that has created a solution that connects everyone in the world. “It will work like the internet does. You will be able to download money as data on your mobile phone. It is very fast and accurate, and we are creating a model where money will move inexpensively, safely and securely,” he said.

BNP Paribas is a strong supporter of SWIFT gpi but is exploring other payment technologies, such as Ripple, and is developing its own internal payments tool using blockchain.

Wim Grosemans, global head of product management, payments and collections, BNP Paribas Cash Management, believes that blockchain technology is less suitable for facilitating the high volume of payments seen in the bank’s domestic markets (Belgium, France, Italy and Luxembourg).

“Blockchain is never real-time. It is always near real-time,” he said. “We are seeing instant payment initiatives all over the place–they are not using blockchain technology,” he added.

Wim Raymaekers, global head, banking market and head of SWIFT gpi, comments: “While there are a number of payment providers and fintech companies proposing new technologies, we are in a unique position since SWIFT gpi has already been adopted by more than 150 financial institutions around the world.”

Ripple's Reach Still Slow

Hundreds of thousands of payments, representing nearly 10% of SWIFT’s cross-border payments traffic, are being sent daily across 220 international payment corridors, according to Raymaekers. These figures are something Ripple is yet to come close to.

Godderis said, other major banks are using SWIFT gpi in the same way that BNP Paribas does. “As soon as we see that another bank is connected to SWIFT gpi any flow between the two banks is then processed using SWIFT gpi rather than the older version of SWIFT. It is a clear switch,” he explains.

“Ripple’s reach is lower than SWIFT’s, so they don’t really compete exactly in the exact same area. However, I believe initiatives like Ripple are pushing SWIFT to innovate which means that they see Ripple as a competitor,” says Godderis. “I believe initiatives like Ripple are pushing SWIFT to innovate which means that they see Ripple as a competitor.”

“It is mainly used to send point-to-point payments between two banks and not really a payment with multiple banks in the chain,” he adds.

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