The world of finance is primed to undergo some big changes. Cross-border transactions need to become cheaper, more efficient, and more accessible. Checking all of these boxes won’t be easy. Swift and Ripple are directly competing in this regard, which has some interesting consequences.
The Current Swift Situation
In the world of international payments, Swift has become a household name. This inter-bank messaging service has dominated the market for nearly five decades. More importantly, it also runs over half of the world’s cross-border payments for larger amounts. All of its member banks have a “stake” in the company and need it to become successful.
Over the years, thousands of banks have become a part of the Swift network. As such, one would expect efficiency when it comes to cross-border payments. That is still not always the case, as some transfers remain expensive and somewhat slow, often taking several days to complete. In this day and age of digital transformation, any delay has become unacceptable.
Even some of its member banks have begun looking for alternatives. Blockchain technology is of great interest in this regard. It offers transparency, speed, and cost-cutting measures. To counter these developments, Swift has begun evolving its messaging system. Moreover, the team is also experimenting with blockchain. That doesn’t mean competitors are not upping their game at the same time.
Ripple Remains the Biggest Competitor
In the world of cross-border transactions, Ripple is quickly making a name for itself. Faster, cheaper, and more reliable options using blockchain technology has attracted a lot of attention. Banco Santander is one of the project’s biggest partners to date. Additionally, there are dozens of other firms conducting experiments with Ripple’s native technology and XRP asset. Santander UK’s Ed Metzger explains the bank’s decision as follows:
“There were some pain points experienced by our customers when making cross-border payments that we wanted to address with the new OnePay FX service. We have had very positive feedback [regarding Ripple] and good take-up. It gives the customer much more certainty over how much money will arrive in the destination account.”
Despite Swift’s upgrades, it seems evident Ripple still holds all of the cards right now. Blockchain is an advanced form of technology for the financial sector. Ripple has a first-mover advantage in this regard. Moreover, Swift seemingly remains skeptical regarding the potential of distributed ledgers. It is that “attitude’ which can make the difference between remaining a market leader and eventually being dethroned.