Ripple has gained a pretty good reputation as a company that lowers the total cost of settlement by enabling banks to transact directly, instantly and with certainty of settlement. Its currency, XRP, has seen growth in value lately, which was partly due to a speculation regarding Ripple’s partnership with the Society for Worldwide Interbank Financial Telecommunication (SWIFT), the world’s leading provider of secure financial messaging services. However, the rumours turned out to be faked.
SWIFT categorically dismissed any talks between the two companies. Ripple CEO Brad Garlinghouse denied the rumours as well. He further critisized SWIFT’s methods. He said:
“The technologies that banks use today that Swift developed decades ago really hasn’t evolved or kept up with the market. Swift said not that long ago they didn’t see blockchain as a solution to correspondent banking. We’ve got well over 100 of their customers saying they disagree.”
“SWIFT is owned by the banks and we’re trying to help the banks. We feel like blockchain technologies are a massive step forward in terms of how correspondent banking has historically worked. The technologies that banks use today – the SWIFT developed decades ago, it hasn’t really evolved.”
In his interview to Bloomberg, Ripple’s CEO said that his company is able to gain customers at a fast rate relative to the market because financial firms are looking for faster, more modern technology than what is currently provided by SWIFT. Garlinghouse believes that Ripple has a significant advantage that will become more apparent in future, with cryptos and blockchain gaining mainstream adoption. However, Ripple still sees SWIFT as a competitor.
Traditionally, SWIFT has controlled the lion’s share of cross-border payments and remittances by offering a secure and trustworthy platform for banks and customers to send money internationally. Currently, SWIFT remains the primary means of large and small transfers across borders, at least in the countries it legally operates in. But with development of cryptocurrencies, the fintech company has faced some limitations and new competitors.
For example, Ripple, which uses blockchain technology, can cut down transfer times and fees. The company has already partnered with the largest money transfer firms in the world, Moneygram and Western Union, for pilot programs to test the crypto-based technology in sending money abroad.
Brad Garlinghouse is very optimistic about his company’s future. He believes that the technology exploited by Ripple will prevail in the long run and leave SWIFT obsolete. He said:
“In that we now signed well over 100 banks – some of the largest SWIFT enabled banks in the world are now using Ripple’s technology.”
Ripple’s CEO added:
“What we’re doing and executing on a day-by-day basis is, in fact, taking over SWIFT.”
Such a statement shows that Ripple has no intention to co-exist with SWIFT.