Marcus Treacher, SVP Customer Success, Ripple talks to BEQUANT about how the organisation copied with the challenges presented by Covid-19, what it will take to install mass adoption of digital assets and what the future holds for Ripple.
How has Ripple adapted to the challenges of COVID-19, and how are you currently supporting your customers and employees?
During this crisis, our priority has and will always be the safety and wellbeing of our employees; we’ve kept our offices closed and put measures in place for our staff to work remotely. These measures entail a safe and comfortable home working setup, mental health programs, and such to provide support for all employees.
In terms of our customers, many are financial institutions such as money transfer businesses and banks, that play a pivotal role in facilitating the flow of money abroad. This is an area that has been massively hit by the global crisis, and for many countries, remittances are a key source of capital income. As such, the World Bank has recommended that public authorities in these markets should treat remittance service providers as essential services during the pandemic. We’ve seen our partners’ customers facing job losses and income reductions on an unprecedented scale, while the need to send money to friends and family is stronger than ever
In response, we’ve partnered with global financial institutions such as Azimo, TransferGo and Siam Commercial Bank to reduce or waive transaction fees during the pandemic. These institutions all serve developing markets most affected by the remittance crisis, and so by temporarily lowering processing fees through these partnerships, payments providers can continue to deliver faster and affordable payments to the people who are most reliant on inbound remittances.
How does Ripple’s technology support the remittance market?
Our fundamental mission is to make the transfer of money as fast, easy, and low cost, as the transfer of information is today over the internet. Instead of moving money around the world through a system of one-sided messages sent between correspondent banks running on legacy systems, we have built a network that serves all, not just the big banks.
The primary use case for RippleNet is low value, high volume payments – we’re focused on remittances because that’s where the highest friction is. Today the average cost of sending $200 is $14 — it’s unacceptable that those who have the least pay the most.
The existing plumbing of global payments was built in the 1970’s to serve the big corporations and banks — today’s payments are completely different, and hundreds of millions of people have been left out of the global economy because of antiquated technology. We work with alternative remittance players like bKash in Bangladesh who have brought digital wallets to 36 million people, many of whom were unbanked or underbanked before.
In a world where remittances are a key lifeline for so many communities and economies around the world, we should be able to service these needs with speed and affordability.
Blockchain technology holds promise – what do you think is a good use case for it in the current economic climate?
Blockchain and digital assets can play a key role resolving issues with the existing system, in turn driving financial inclusion in a few ways – this is vital in today’s current climate. They can make remittance payments more transparent and much faster as all transactions can be tracked and financial institutions do not have to manoeuvre multiple correspondent banks within the payment value chain. This empowers non-bank payment providers to offer low cost remittance services to more customers in markets that need it most.
What are some barriers still holding back wide scale adoption of digital assets?
Given the proven use-case for digital assets, this question comes down to trust. Having been around for centuries, traditional banks and currencies command a great deal of trust in their services as most consumers have never used anything else. Even if a product has a proven track-record of usability and worth, it will naturally take time for many users to invest their hard-earned money into a relatively recent innovation like digital assets. But as more banks begin to embrace digital assets, we can see this trust rubbing off.
The centuries-old existence of banks and traditional currencies has also meant that, over the years, comprehensive rules and regulations have been put into place to control how these assets are dealt with. There are pages upon pages of regulatory background to a pound or a dollar, the likes of which are still being developed for digital currencies.
But this is thankfully changing all the time. As traditional tech and finance players enter the digital currency arena, such as Facebook, Fidelity, Amazon and JP Morgan, we can see an inflated demand for more thorough regulation. This expansion of the digital asset market is acting as the catalyst for governments and regulatory bodies to begin thinking properly about cryptocurrency as assets that need a space in common law.
We’ve also seen other regulatory bodies like ISO 20022 working to create a single common ‘language’ for all financial communications, allowing participants and systems in different markets to communicate in a consistent message format. And with Ripple’s acceptance into this standards body as the first blockchain company, we can start shaping what the future of payments can look like – as it’s estimated that 87% of global financial transactions will be supported by ISO 20022 by 2023.
How do you see digital assets and blockchain technology evolving in the next decade, and how has COVID-19 impacted this?
COVID-19 has shown how traditional systems – payments, and otherwise – are not prepared for catastrophes on this scale. This is something the world hasn’t dealt with before, and is catalysing change on an unprecedented scale. Specifically in financial services, the need for technologically modern, open systems is more obvious than ever.
Blockchain is poised to play an integral role in our future global financial system, because of its inherent open, transparent nature. As we can already see, there is interest from governments to traditional finance, from neobanks to the biggest money transfer companies to explore and adopt this technology. Let’s remake the future global financial infrastructure into something that serves people, not the other way around.
How do you think the relationship between digital assets and traditional banks will evolve over the coming years?
As we see a continuing trend of greater acceptance and adoption of digital assets by traditional banks, we have a unique opportunity – as fintechs – to collaborate with these institutions and catalyze innovation at a greater pace. Our combined knowledge, capability, and customer reach holds the potential to remove friction in payments, by giving us the ability to almost entirely reset the plumbing of how these payments flow.
Innovation could be at the forefront of product development, combining the established reach and influence of traditional banks with the industry-leading tech and new talent at the disposal of fintechs. Offering these innovative services as a team would help to boost trust in fintech’s financial services to a greater level, and could give established banks’ customers a far faster and more contemporary experience.
If we look at the partnership between Ripple and Banco Santander, one of the largest commercial banks in Spain, for instance. Together, we launched One Pay FX, a blockchain-powered mobile application that solves the problem of slow and opaque international payments. The application completely overhauled the inconvenient process previously in place where a customer would have to visit a branch, fill in forms and then wait days for the recipient to receive the money. Now, the bank uses RippleNet to offer same-day international payments with an easy mobile experience.
If fintechs and banks were to build this kind of continued and mutually beneficial relationship, more services could be elevated to modern standards of customer service and speed as we continue to pull legacy banking systems out of their comfort zone and into the modern era of banking.
What’s next for Ripple?
We’re laser focused on further growing our network, RippleNet – from the number of customers who join the network to the corridors in which they operate, with a mission of enabling payments everywhere, every way for everyone. We’re also focused on expanding our On Demand Liquidity service which uses XRP as a bridge currency between two fiat currencies — this is the first time that digital assets are being used in production for an enterprise use case. We have established On Demand Liquidity corridors into Mexico, the Philippines, Australia and Europe, and we’re hoping to further this expansion by opening corridors to APAC and EMEA this year.