Banking technology provider Finastra, which works with more than 9,000 clients, is partnering with payment network Ripple to facilitate real time, blockchain-supported payments for its customers.
For Finastra, the tie-up enhances the suite of services it offers its bank clients, while for Ripple, it extends its reach to more institutions. Ripple currently works with more than 200 institutions across 40 countries, including American Express, Santander, MoneyGram and PNC Bank.
According to Marcus Treacher, senior vice president of customer success at Ripple, the agreement, which was finalized last week, is a big boost for Ripple’s global expansion efforts. “Ripple embeds with the Finastra platform and Finastra then serves many payments customers and then connects them over its own network to many counterparties around the world,” he said. “Working with network players like Finastra, we get into these really powerful platforms.”
Using its payment network, Ripple seeks to solve a longstanding problem with how cross-border payments have been traditionally handled by banks through the Swift network. Cross-border payments take time and are costly, because institutions need to work with correspondent bank accounts which generate multiple steps and fees along the way.
Ripple’s real-time settlement network, RippleNet, simplifies this process. According the company, transactions can be completed in seconds instead of days, thanks to blockchain technology and a digital currency called XRP that it uses as a bridge asset to facilitate the transactions. As part of Ripple’s offering, clients can use its on-demand liquidity feature which uses XRP for cross-border payments.
“[The traditional system] has a lot of messaging and back and forth like a local post office,” said Treacher. “With Ripple, the software controlling either end of a payment — let’s say an origination bank and a receiving bank in a foreign country — synchronizes the ledgers at both ends of the payment journey.”
In a statement, Riteesh Singh, Finastra senior vice president, said Ripple’s technology is particularly beneficial for its customers located in geographies where the cost of correspondent banking is high.
Ripple, however, isn’t the only company using blockchain technology for cross-border payments. Indeed, others including IBM, R3 and Hyperledger offer blockchain-based payment solutions. Asked if Ripple offers interoperability with other networks, Treacher stressed that Ripple is an open platform. “The cornerstone of the network is an open protocol which is called the Interledger Protocol, and that means we can connect very different ledgers together.”
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