Banks Unlikely to Apply Blockchain for Cross-Border Payments in Near Future
In an interview with Reuters, Schwartz argued that despite the fact that banks acknowledge blockchain technology’s potential in reducing transaction times and costs, the technology is still not scalable and not private enough to be implemented by banks on a global scale.
Ripple claims that xCurrent’s immutable “interledger” protocol offers instant settlement, making it superior to existing payment networks. However, xCurrent “is not a distributed ledger,” according to Schwartz. In xCurrent’s case, the network peers do not have access to a shared ledger, which is the basis of major blockchain networks like Ethereum (ETH) or Hyperledger. Schwartz said:
“What we hear from many of our customers is that it’s imperative to keep their transactions private, process thousands every second, and accommodate every type of currency and asset imaginable.”
Marcus Treacher, senior VP of Ripple customer success, said the firm had launched a project to offer banks “classic” blockchain-powered payments. However, the banks rejected the initiative, citing that one cannot just put “the whole world on a blockchain.”
According to Reuters, a number of banks have tested and incorporated Ripple’s xCurrent technology for cross-border payments that can “eventually plug them” into distributed ledgers.
In May, financial institutions that took part in a pilot of Ripple’s xRapid platform reported transaction savings between 40-79 percent, while also noting a significant improvement in transaction time, from an average of 2-3 days to “just over two minutes.”
In April, Spanish-based international bank Santander confirmed the launch of its Ripple-powered blockchain payment network One Pay FX, reportedly becoming the first bank to do so.