PayTech

Can Ripple, IBM & VISA Challenge SWIFT Monopoly?

SWIFT

SWIFT has come to the fore again but now not for the wrong reasons.

It was because the cooperative cross-border payment giant CEO Gottfried Leibbrandt will step down in June 2019, after spending seven years leading a key piece of global economic infrastructure through crises from hacking to sanctions on Iranian banks.

Leibbrandt’s departure from the Brussels-based co-operative comes at a time of intense change in the technology landscape. Swift is facing existential threats on a number of fronts, with rival blockchain-based networks from likes of Ripple, IBM and even Visa promising a new era of low cost real-time cross-border payments, bypassing the traditional correspondent banking routes.swift

Rival services are not the only worry facing the co-operative, with the dangers faced from hackers high up the agenda following a string of successful multi-million dollar heists by cybercriminals penetrating bank defences.

Liebbrandt has responded to the competition with the roll out of Swift gpi, a set of service-level agreements that promise end-to-end tracking and near real-time deliverables of messages flowing over the network.

YOU MAY ALSO READ: SWIFT CEO Leibbrandt Steps Down June 2019

Rival services are not the only worry facing the co-operative, with the dangers faced from hackers high up the agenda following a string of successful multi-million dollar heists by cybercriminals penetrating bank defences.

How would Ripple, IBM and even Visa eat SWIFT’s dinner? What would they do differently from SWIFT?

Ripple

Ripple is adding high profile banks to its roster of clients at some speed as it promises to create an ‘internet of value’ in the payments world. There are even rumors that it will partner with Amazon.

Banks such as Standard Chartered, Santander and Swedish SEB bank are proud users of blockchain payments technology Ripple and SWIFT. While both companies offer enhanced cross-border payment capabilities, they both deny that they are direct competitors.

Albert Maasland, CEO of Crown Agents Bank–a global transaction bank for emerging markets, says “Ripple may well gain a lot more traction. It has gained a lot of attention but has not been properly tested yet,”

However, he adds: “It would be foolish to disregard SWIFT gpi. They are in a good position if they continue to develop. We see our role as supporting different initiatives. It is not about supporting only one.”SWIFT

It can be very enticing to create a ‘David versus Goliath’ narrative around SWIFT gpi and Ripple, but this isn’t exactly the case, says Shirish Wadivkar, global head of corresponding banking products, Standard Chartered.

“In reality, the two providers are offering different approaches to the market, and there are benefits to be derived from both,” he argues. “The competition is also far from binary, with a multitude of payment companies becoming increasingly innovative.”

“Neither the corporates nor the banks are in love with any particular technology. We are all more interested in solving the issues with international payments,” Wadivkar said.

Standard Chartered uses both Ripple and SWIFT. BNP Paribas has been very vocal in its support of SWIFT gpi but is also exploring blockchain-based payment technology.

Damien Godderis, senior product manager, international payments and correspondent network, BNP Paribas Cash Management, says the two companies are competitors in some cases, but not in others. There are some key differences, for example, SWIFT gpi is a network of banks whereas Ripple technology is sold as a product to individual banks.

Marcus Treacher, senior vice president of customer success at Ripple, told GTNews: “SWIFT doesn’t really compete with Ripple in our view. SWIFT gpi has been around for a long time and it is making the SWIFT process a little less painful by adding more messaging and control into a 20th-century model.”

He argues that Ripple is doing something different. “We are thinking about how money moves in a very different way. We are creating an internet of value.

“SWIFT gpi will improve things a little bit but it won’t really match the speed, efficiency and visibility that we create with the Ripple network, so we don’t look at them as a serious long-term competitor.

Treacher argues that Ripple is the only market player that has created a solution that connects everyone in the world. “It will work like the internet does. You will be able to download money as data on your mobile phone. It is very fast and accurate, and we are creating a model where money will move inexpensively, safely and securely,” he said.

BNP Paribas is a strong supporter of SWIFT gpi but is exploring other payment technologies, such as Ripple, and is developing its own internal payments tool using blockchain.

Wim Grosemans, global head of product management, payments and collections, BNP Paribas Cash Management, believes that blockchain technology is less suitable for facilitating the high volume of payments seen in the bank’s domestic markets (Belgium, France, Italy and Luxembourg).

“Blockchain is never real-time. It is always near real-time,” he said. “We are seeing instant payment initiatives all over the place–they are not using blockchain technology,” he added.

Wim Raymaekers, global head, banking market and head of SWIFT gpi, comments: “While there are a number of payment providers and fintech companies proposing new technologies, we are in a unique position since SWIFT gpi has already been adopted by more than 150 financial institutions around the world.”

IBM

IBM said it launched its Blockchain World Wire, billed as a cross-border payment system that is powered by the Stellar blockchain network. The tech giant also said that the blockchain-enabled conduit is more cost-efficient than seen with traditional payment methods, and can support any number of asset types, across destinations and sizes. The process integrates the World Wire API into banks’ payment systems.

The company said that the Blockchain World Wire can simultaneously clear and settle cross-border payments in near real time. By way of illustration, the company gave a scenario:SWIFT

“Two financial institutions transacting together agree to use a stable coin, central bank digital currency or other digital assets as the bridge asset between any two fiat currencies. The digital asset facilitates the trade, and supplies important settlement instructions. … It all means funds can now be transferred at a fraction of the cost and time of traditional correspondent banking.”

Visa

Visa has announced new product details in anticipation of the first quarter 2019 launch of its new cross-border B2B payments solution B2B Connect.

“With B2B Connect, we’re developing a new way for businesses to make cross-border, high-value payments — fixing broken processes and breaking down geographic barriers along the way,” Kevin Phalen, global head of Visa Business Solutions at Visa, said in a press release

“B2B Connect will facilitate payments for financial institutions for a variety of industry verticals, including supply chain, trade, institutional banking and more.”

B2B Connect’s digital identity feature tokenizes an organization’s sensitive data, such as banking details and account numbers, giving them a unique identifier that can be used to securely facilitate transactions on the platform.

“B2B Connect’s digital identity greatly reduces the opportunity for fraud that might otherwise exist with checks, ACH and wire transfers today, while also helping companies remain compliant as part of the regulated financial ecosystem,” added Phalen.SWIFT

Earlier this year it was reported that the company was testing the solution, with several FIs working with Visa to pilot and roll out B2B Connect. Those firms include UnionBank, Shinhan Bank, Commerce Bank in the U.S. and United Overseas Bank in Singapore.

In anticipation of the launch, Visa has also expanded partnerships to add functionality to the B2B Connect platform. The company revealed that it is integrating open source Hyperledger Fabric framework from the Linux Foundation with Visa’s core assets to improve facilitating financial transactions.

And FinTech company Bottomline Technologies is working with Visa to be the first partner to integrate its solution with B2B Connect.

“Bottomline serves 1,200 financial institutions globally, and they are always looking to us to provide them with value-add innovations that simplify processes and increase efficiencies,” said Rob Eberle, president & CEO, Bottomline Technologies. ”We’re thrilled to work with Visa on this integration to enable our mutual financial institution clients to easily access the B2B Connect platform.”

SCRIPT: Sola Fanawopo