Ripple has formed a six-bank Global Payments Steering Group (GPSG), calling it “the first interbank group for global payments based on distributed financial technology.”
A New SWIFT Challenger
Although the announcement does not mention it explicitly, the new network is a potential challenger to SWIFT. First activated in the 1970s, SWIFT is the global standard for processing international settlements between banks.
The new steering group consists of: Bank of America, Merrill Lynch, Santander, UniCredit, Standard Chartered, Westpac Banking Corporation, and Royal Bank of Canada.
Only Bankers’ Blockchain With Defined Rules and Governance
The announcement comes just a week after Ripple revealed that more banks were joining a network using its technology. That network, containing 15 of the world’s top 50 banks, is separate from the GPSG.
The GPSG is more focused than the existing group. The official announcement stated:
“Although Ripple already has an extensive network of banks, the GPSG will serve a specific purpose. The group will oversee the creation and maintenance of Ripple payment transaction rules, formalized standards for activity using Ripple, and other actions to promote implementation of Ripple payment capabilities as our network continues to grow.”
Therefore, the company describes the GPSG as the world’s only blockchain-based settlements network for banks with defined rules and governance. It is promoting the network as a way for financial institutions to try real-time blockchain settlements in a low-risk environment.
The news could be opportune timing for Ripple, if it indeed has its sights set on SWIFT. The legacy standard network is reeling this month after suffering breaches at up to 12 banks. This is in addition to a swindle that saw Bangladesh’s central bank lose $81 million via a SWIFT hack earlier this year. The money is still missing.
Ripple on the Rampage
Using the technology, Canadian bank ATP Financial sent a transaction to Germany’s Reisebank just over a week ago. It was reportedly the first international interbank payment via blockchain technology.
The same week, Ripple also announced a massive $55 million Series B funding round, making it one of the largest-funded blockchain projects around.
It was one of the first companies in the blockchain industry to openly admit that its technology is aimed at banks.
As a permissioned blockchain, it receives a mixed response from the Bitcoin community examining its open-source but centralized technology.
Is the new banking group a significant step? Will the global financial revolution come from within the banking industry, or outside it?
Images courtesy of Shutterstock, Wikimedia Commons.
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