This is the second post of three in a series on Ripple’s vision and product strategy. You can read the first here and the final post here.
Our Strategy: Partner and Rebuild
We learned early in our journey that despite what Bitcoin purists will preach, financial institutions aren’t the enemy. Money is a powerful tool — mostly used for constructive purposes — but can be used for harmful, criminal activity. To encourage constructive development and prevent criminal use, governments regulate payments.
Financial institutions have built the systems and teams to legally operate payments businesses.
They’re experts in operating payments businesses.
We don’t see a future without financial institutions.
Starting in the early days, we’ve taken the approach of partnering with financial institutions to rebuild payments infrastructure. They are our customers.
When we say “financial institutions,” we don’t just mean banks. Importantly, our customers are banks and many breeds of payment providers (money transfer operators, payment networks, mobile wallets, etc.).
There are challenges to partnering with financial institutions and rebuilding global payments infrastructure compliantly — it takes time. To solve a problem as big and complex and impactful as the one we’re solving, doing it the right way is worth the time investment!
By partnering with financial institutions (FIs), we attack three root cause issues with cross-border payments:
- Speed and certainty
- Liquidity management
- Connection standardization
We’re working to address these three issues simultaneously.
Strategy One: Solve Speed and Certainty with xCurrent
Today, cross-border payments are slow, opaque and unreliable, in large part due to the fact that FIs can’t easily communicate information about a payment between each other.
xCurrent, software FIs install as part of their core payments processing infrastructure, enables FIs to communicate information about a payment between each other in real-time, and settle the payment instantly. xCurrent doesn’t use XRP as part of the solution. We’ll get to how XRP fits into the ecosystem next.
We first introduced xCurrent in late 2015 and we launched an enterprise-ready version of it in early 2016.
As the most mature in our product suite, it’s gained the most adoption across banks and payment providers. We only sign customers who are serious about using xCurrent commercially. We don’t waste our time on proofs of concept or science experiments at innovation labs.
Customers almost always start with a pilot that tests the software using real funds (duh!), before deploying xCurrent commercially. A commercial deployment means the institution processes their customers’ payments through xCurrent.
One customer describes the implementation process as sensitive as “changing a jet engine in flight” since xCurrent directly integrates with an FI’s core payments processing infrastructure. As you might expect, the process of signing an FI, running a pilot with them, completing a production deployment and then transitioning payments volume from their old system to xCurrent in a careful and measured way takes a matter of months.
SBI Remit and Siam Commercial Bank went live with Ripple-powered remittances last June. Their customers send more payments more frequently now — a strong signal they like the service!
SEB, a large Scandinavian bank, has now processed close to $1 billion in cross-border payments over xCurrent. Feedback has been so positive on speed and reliability, SEB is expanding its offering of Ripple-powered payments to more of its customers.
Considering FIs haven’t changed this infrastructure since the 1970s(!!), we’re incredibly pleased with the rate of adoption and the success these early adopters report back to us.
Continue reading, “Much Ado, Much To Do – Part 3.”