Ripple Labs Inc., the blockchain startup whose digital money is often used as a proxy for other cryptocurrency payments, is gaining new customers because financial firms are seeking faster, more up-to-date technology than the Swift banking network, CEO Brad Garlinghouse said.
The Swift, an acronym for the Society for Worldwide Interbank Financial Telecommunication, and IBAN (International Bank Account Number) systems have long been used by banks, individuals and businesses to send and receive money.
Ripple was in the headlines in September when XRP, its cryptocurrency commonly referred to as Ripple, rallied briefly. It remains down more than 80 per cent this year from its January peak, according to Bitstamp pricing compiled by Bloomberg.
Blockchain technology can eliminate the need for a central standardised system because it works as a public ledger, enabling the digital transfer of money without the need to route it through accounts at banks and financial institutions.
While Ripple, Bitcoin and other cryptocurrencies have gained in popularity, they have yet to unseat the standards embraced by the financial industry for wire transfers. Based near Brussels, Swift has more than 11,000 customers in 200 countries and territories, according to its website.
Last month, the Financial Action Task Force, a global anti-money laundering body, said that world governments needed to coordinate regulation of digital assets to prevent their misuse by criminals and terrorists. The cryptocurrency industry has faced high-profile exchange hacks, increased global regulatory scrutiny and a lack of wider mainstream adoption among institutional investors.
“The technologies that banks use today that Swift developed decades ago really hasn’t evolved or kept up with the market,” Garlinghouse said in an interview with Bloomberg TV on the sidelines of an event in Singapore.
“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.”
Ripple Labs says it has more than 100 banks and payment providers on its RippleNet network, including Japan’s Mitsubishi UFJ Financial Group Inc. and Standard Chartered Plc, according to its website. Garlinghouse also said that speculation within the blockchain industry of a potential link-up between Ripple and Swift wasn’t true.
“What we’re doing and executing on a day-by-day basis is, in fact, taking over Swift,” he said.
This article first appeared on Bloomberg.