It’s long been known that Swift and Ripple, two companies looking to streamline payment processes, have battled it out over who is a better platform. Well, the two CEO’s, Gottfried Leibbrandt and Brad Garlinghouse, respectively, had a public, face-to-face discussion as a part of the “Let’s Send the Money” panel at the Paris FinTech Forum 2019. Both argued over the future of cross-border payment solutions.
This discussion was moderated by Elizabeth Schulze, who works as a Technology Correspondent for CNBC International. She started the conversation with Leibbrandt, asking why Swift was the future over Ripple. He responded as follows:
“First, because we have 10,000 banks in the network, and that, I think, is a resilient system, correspondent banking, and the other reason is [that] we are innovating like crazy… The big innovation we introduced three years ago called GPI, Global Payments Innovation, which really takes correspondent banking into the 21st century.”
Innovative Without Blockchain
Primarily, his project uniquely identifies each payment made on the system and enables users to trace it from start to finish. The entire process is transparent, fast, and useful.
“So, we now have more than half of the payments globally on that new platform. Most of those arrive within half an hour, end to end, customer to customer. We’ve signed up over 400 banks, all of the top 60 are on there, and we are looking towards general adoption in a year and half, and then the whole of correspondent banking will be on that new platform… and with that, you get all the benefits of the existing model — bak-centric, deep liquidity, with all the controls that banks have built around KYC, sanctions screening, and the whole of the compliance controls that go with it.”
Garlinghouse responded with an argument defending “the internet of value.” He compares the battle between both companies as similar to the one between Amazon and Walmart in 1997/1998, describing it as a “David and Goliath” fight. While Garlinghouse praised Swift’s payment system and recognized how it was a big achievement for traditional banking, he ultimately compared it to making a “horse and buggy” move faster than before instead of just buying a Ferrari:
“Ripple talks a lot about what payments look like not just today but in 10-20 years, and when you think about that, we are talking about the Internet of Value: How do we move value the way information moves today. Ripple thinks about the Internet of Value: Really democratize payments, reducing costs dramatically, increasing speed dramatically … We really think the same way as we’ve introduced new technologies like TCP/IP and HTTP that became the internet of information. I think the future we see is certainly one of many networks, interoperable networks, reducing the friction of payments to close to zero and I think we are going to see a lot of innovation apart from Ripple.”
A History of Arguments
Swift originally wanted to use Ripple’s technology, which was brought up during the discussion. Here, Leibbrandt describes why they chose not to partner in the end:
“We had a long discussion about blockchain vs. API… Blockchain, we think is further out. We’ve run a big Proof-of-Concept with blockchain, several Proofs-of-Concept I should say, one of them to put it inside the reconciliation between banks, Nostro vostro. We had 40 banks participate in that. It was the largest HyperLedger implementation outside IBM… But when we evaluated it with the banks, they said ‘that works a proof-of-concept, but it is not clear to us that it is that much better than what we have today given the migration cost.’ We find that for them it is much easier to integrate with APIs and what we are now offering with GPI than it is with blockchain.”
Right now, banks aren’t incredibly comfortable with XRP (Ripple’s currency) due to volatility. Swift’s technology works well with current banks, and it decreases their workload. Garlinghouse counters these claims, calling them full of misinformation. He believes that volatility is nowhere near as necessary, and that immediate transaction time is vital:
“SWIFT today is a one-way messaging framework. It isn’t actually a liquidity provider… When we think about the internet of value, it’s a mixture of two-way messaging frameworks… coupled with real-time liquidity… I hear people talking about volatility, and I feel they are propagating misinformation… If you take a low volatility asset [fiat] times a long duration vs. a high volatility asset [crypto] for a very short amount of time, it turns out that mathematically there is less risk in the XRP transaction than in the fiat transaction.”
Those interested can watch the whole argument here.