On Wednesday (January 30th), day two of Paris FinTech Forum 2019, Ripple CEO Brad Garlinghouse and SWIFT CEO Gottfried Leibbrandt had a debate at a panel called "Let's Send Money", which was about the future of cross-border payments. This article covers the main highlights of this exciting and important debate.
The pane was moderated by Elizabeth Schulze, and Technology Correspondent for CNBC International. Schiff started SWIFT CEO's SWIFT debriefing on why SWIFT was the future of cross-border payments.
The SWIFT CEO said there were two reasons:
"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. In essence, we've introduced a unique identifier for each payment so you can track your payments all the way through. We provided a set of rules for speed, and we provided transparency on the pricing. That has greatly enhanced the experience for customers – that's what it's all about. I was in China the week before last, and the Chinese banks told me 'every payment we now send to the US is there within minutes; so, it's nice that you have tracking, but now cross-border payments have really improved. The same for corporates: you can now track it, etc … and I think the other great news is that we already have the network, we can roll it out, make it backward-compatible, etc. So we 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 have signed up over 400 banks, all of the top 60 are on, and we are looking for general adoption in a year and a 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 all the compliance controls that go with it. So, I'm extremely excited about it … I do not think we could have done this without making it clear to banks that they need to shape up their acts that we did in common with them. We could not have done it without technology … "
The Ripple CEO responded by describing the idea of "internet of value". He then said that he saw the dynamic between Ripple and SWIFT not dissimilar to the dynamic between Amazon in 1997-1998 and Walmart, calling it "David and Goliath" kind of story. He later said that although SWIFT's GPI was a big step forward for the traditional corrspondent banking model, it was like trying to make a "horse and buggy" go faster when you could just move to a Ferrari.
Schulze then reminded Garlinghouse that he had in the past said that Ripple would take over from SWIFT in the area of cross-border payments. Garlinghouse replied:
"Well, I have also said that there are ways we can work with SWIFT."
Schulze asked Leibbrandt how he felt about a partnership with Ripple, to which he replied:
"… I do not see the role of banks going away if they innovate fast enough … One of the exciting things about the new GPI platform is that it is extremely interoperable and open and we've always had We are announcing later today a Proof-of-Concept with R3 … where you can initiate a payment on the trading platform and that goes into GPI. Santander is on SWIFT as well, so they can act as the peering point between the two networks … I firmly expect that, within a few years GPI will be de facto real-time cross-border. "
Featured Image Courtesy of Paris FinTech Forum