Ripple Not Impressed By SWIFT’s Global Payments Initiative
When it comes to exploring blockchain in the financial sector, Ripple seems to be on most institutions’ lists. The company is also represented at the annual Sibos conference, and they are not doing so in a shy manner either. By being very vocal on social media and posing some tough questions, Ripple is turning a lot of heads. But not everyone is too amused about their brash attitude during this event.
Sibos Attracts Financial Innovation From All Industries
Ripple is, as a blockchain service provider, a direct competitor for most the global banking systems presented at Sibos. The Global Payments Innovation initiative, which is run by SWIFT, is one of the top projects attendees are paying attention to. But the Ripple team is not entirely convinced this system has any viability in the long run.
To put this into perspective, SWIFT announced they had completed the first pilot of their Global Payments Innovation Initiative (GPII). A total of 15 global banks were part of this cross-border payments project. More importantly, the initiative has attracted the interest from several dozen other banks around the world.
At the same time, Ripple continued to strike partnerships with global banks as well. Financial institutions want to be part of the distributed ledger revolution, and they see Ripple as the go-to partner. It doesn’t take a degree in rocket science to figure SWIFT and Ripple are on opposite ends to reach the same goal.
Ripple Asks SWIFT Some Tough Innovation Questions
One of the big “talking points” the blockchain provider is concerned over is how the Global Payments Innovation initiative creates risk. Moreover, the costs and delays associated with this system are a concern as well. According to Ripple, the system as a 12 percent error rate, which is not acceptable for the financial sector. One might even argue whether or not this SWIFT initiative offers any innovation at all.
Ripple posted the following on Twitter regarding the SWIFT project:
“SWIFT’s GPII will continue to mandate its 140-character message for payment instructions; that much has not changed. Unfortunately, important data such as invoices are not permitted. The existing flaws caused by the serial process are not addressed. SWIFT has not actually innovated the core of this messaging system; GPII is an iteration of exactly what SWIFT provides today with a marginal increase in speed for availability of funds.”
On the blockchain side of the equation, Ripple offers bidirectional messaging that allows information and sharing between involved parties. This is all done in real-time before the transaction is even executed. When it comes to speed, blockchain seems to achieve far superior speeds. A recent transaction between Reisebank and ATB Financial only took eight seconds to settle a $1,000 transfer.
Regardless of which side one is on, it is evident the settlement of transactions will undergo severe changes in the coming years. Whether that will be through SWIFT, Ripple, or another party, remains anybody’s guess for now. But this competition is good for the consumer and enterprises, as they will reap the reward from cheaper and faster solutions.