Crypto Currencies

Ripple Explained - Chapter 4: Ripple wants to become the «Bitcoin of banks»

29 Jul 2019 | 3 min read

Vontobel now offers investors access to the crypto currency «Ripple». But what is Ripple (XRP)? In six chapters, we want to give you high-quality knowledge about the exciting topic of «Ripple».

The Ripple network sees itself as an interface for international payment transactions of banks and payment service providers. Ripple has therefore developed a platform that is compatible with as many banking infrastructures as possible. The acceptance of Ripple and its products xRapid, xCurrent and xVia is already huge. The technology behind Ripple therefore has the potential to assert itself as the «Bitcoin of banks». XRP also wants to distinguish itself from Bitcoin and other crypto currencies: While Bitcoin was created as a reaction to the financial crisis of 2008 and wants to make banks superfluous one day, Ripple is positioning itself as a partner of the banks.

Ripple relies on close cooperation with financial institutions: The crypto currency was further developed over time, until finally various well-known banks began to integrate the Ripple and the associated payment network into their systems. Ripple is constantly investing in the network and entering into more and more partnerships with countless global companies and financial institutions.

Zusammenarbeit mit American Express und Santander

According to Ripple, more than 200 companies companies have now entered into a cooperation agreement to use the xCurrent software for international payments. These include banks, payment service providers and stock exchanges for digital assets. Since November 2017, big names such as the credit card provider American Express and the Spanish bank Santander have also been cooperating with Ripple. With xCurrent, they want to accelerate transfers between the USA and Great Britain. This allows American Express business customers in the USA to transfer money via Ripple's network to Santander accounts in the UK. According to a McKinsey study, 60% of all cross-border B2B transfers still require manual intervention. This takes an average of 15 to 20 minutes, which Ripple could complete in a matter of seconds. If this project is successfully implemented, the cooperation partners could also imagine extending the system to other countries.    

Ripple continues to expand its ecosystem

And more and more partners are joining. Ripple's partners already include banks from around the world, including UBS, UniCredit, Bank of America Merrill Lynch, BBVA (Spain's second largest bank), Mitsubishi UFG (Japan's largest bank), Akbank in Turkey, Swedish SEB Bank and two Indian banks, Axis Bank and Yes Bank.

The payment service providers Western Union and Moneygram have also partnered with Ripple. Western Union has been testing the Ripple platform for some time. The aim is to make the transfer of payments via the blockchain faster and more cost-effective than the methods previously used. Western Union is the world's best-known provider of cash transfers with over 200 million customers and is therefore an important catalyst for the spread of the Ripple technology. In addition, MoneyGram - the second largest provider of money transfers - will integrate Ripple payments for cross-border transfers. In return, Ripple will invest USD 50 million in the company. With this investment, Ripple acquires an 8%-10% stake in MoneyGram.

Conclusion: Ripple technology revolutionizes the financial industry

These collaborations show that Ripple can gradually offer mature payment solutions in international currency areas and that well-known companies are already interested in Ripple. Some companies will probably wait and see what Ripple's partner companies will accomplish after the integration of the Ripple platform. If that turns out to be positive, Ripple could be used not only across borders, but also across institutions.

The ever-increasing number of cooperation partners - especially banks - shows that there is great interest in Ripple technology. The banking industry has recognised that crypto currencies such as Bitcoin and Ethereum could revolutionise the financial sector. Ripple technology could, however, trigger a revolution for banks.


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