12 R3 Member Banks Trial Cross-Border Payments with Ripple’s XRP over its Blockchain
Twelve member banks of the R3-led banking blockchain consortium and the New York-based startup have trialed Ripple’s native digital currency token XRP, using the Fintech startup’s blockchain technology.
The trials were conducted at R3’s lab in an effort to demonstrate cost-cutting and increased efficiency of cross-border payments using Ripple’s ‘digital asset’.
The twelve R3 member banks involved in the trial include Barclays, BMO Financial Group, CIBC, Intesa Sanpaolo, Macquarie Group, National Australia Bank (NAB), Natixis, Nordea, Royal Bank of Canada (RBC), Santander, Scotiabank, and Westpac Banking Corporation.
The traditional process for cross-border payments sees banks allocate liquidity among nostro accounts, which are localized bank accounts particular to the country, around the world. These nostro accounts require capital to be funded by the banks partaking in a cross-border payment transaction. Ripple sees its blockchain platform and its token currency XRP, to circumvent the inefficiencies of the current cross-border payment procedure used by the banking system.
Elaborating on the trials, Ripple’s accouchement reads: “This trial introduced XRP to test the feasibility of reducing or retiring the use of current nostro accounts for local currency payouts.”
Ripple claims that XRP exhibits the fastest settlement speed among all prominent digital currencies, citing speeds of five seconds or less.
David Rutter, CEO of R3 further added that “digital assets” and blockchain technology can now enable real-time exchange of currencies between participants around the world, proving a viable alternative that did not exist to the legacy banking structure until now.
This prototype paves the way for a major overhaul of how banks process and settle cross border payments.
Credit Card Company Joins R3
R3’s latest member to swell the ranks in a growing list of participants in the blockchain consortium is Synchrony Financial, the first credit card company to join the pack.
The company will join 70 of the world’s biggest banks and financial institutions under the common roof of the R3 Research Lab to develop commercial, real-world blockchain applications through a collaborative effort.
Carol Juel, EVP and CIO at Synchrony Financial did not reveal significant details about the credit card company’s interest in harnessing blockchain technology, but added:
Having access to the R3 network and research will be valuable as we think through the many opportunities for blockchain to be leveraged across the consumer finance landscape.
Meanwhile, R3’s blockchain software Corda, will go open source, a surprise announcement from the New York-based firm revealed late last week. The code will be released toward the end of November, as a contribution to the open-source, Linux Foundation-led Hyperledger project.