XRP, the cryptocurrency created by Ripple Labs, has seen growing adoption by banks and financial institutions over the past few years. As one of the largest cryptocurrencies by market capitalization, XRP offers banks a fast and inexpensive way to facilitate cross-border payments and currency trades.
The Benefits of XRP for Banks
There are several key benefits that make XRP attractive to banks and financial institutions:
- Speed – XRP transactions settle in just 3-5 seconds, far faster than typical cross-border bank transfers.
- Low cost – XRP transaction fees are just fractions of a penny, significantly lower than typical wire transfer fees.
- Scalability – The XRP network can handle up to 1,500 transactions per second, making it highly scalable for institutional use.
- Liquidity – With over $6 billion worth of XRP in circulation, there is ample liquidity for banks to quickly source and trade large amounts of XRP.
By leveraging XRP for liquidity management and cross-border transactions, banks can save time and money while offering faster payment settlement times to customers.
XRP as a Bridge Currency
One of the key uses of XRP by banks is as a bridge currency for international payments and currency trades. Rather than directly converting currencies across borders, banks can first convert fiat currencies to XRP. Then the XRP can be quickly traded or transferred internationally and converted into the destination fiat currency.
This allows banks to avoid opening multiple currency accounts across the globe. Instead, they only need to hold XRP in order to facilitate transfers between different currencies quickly and easily.
Banks Invested in Ripple and Using XRP
Ripple Labs currently has over 300 banking customers globally using its enterprise blockchain solutions. While not all of these banks utilize XRP directly, a growing number are conducting pilots or actively trading and making payments with XRP.
Some of the most notable banks using or invested in Ripple include:
Santander
Spanish banking giant Santander has been one of Ripple’s key partners. In 2018, Santander launched a foreign exchange service called Santander One Pay FX that uses Ripple’s xCurrent platform and XRP to facilitate cross-border transactions. Santander has conducted over $1 billion worth of transactions on RippleNet.
SBI Holdings
Japanese financial services company SBI Holdings has made significant investments in Ripple, believing it to be strategic to their international payments business. SBI also launched SBI Ripple Asia in 2016 to promote Ripple services in Asia.
Banco Santander
Banco Santander, based in Brazil, announced in 2018 that they would use Ripple’s XRP for international payments between their branches in Brazil, Spain and Poland. This makes them the first bank to publicly announce the use of XRP for cross-border settlement.
Standard Chartered
Global banking giant Standard Chartered joined RippleNet in 2018 and has piloted XRP for dollar to rupee transactions. Standard Chartered will also open the first RippleNet member bank in the Middle East.
National Bank of Egypt
The National Bank of Egypt teamed up with Ripple in 2018 to launch new remittance corridors using RippleNet. The bank uses Ripplenet’s xCurrent platform and may adopt XRP for liquidity management.
Axis Bank
India’s Axis Bank joined RippleNet in 2018 to facilitate cross-border transactions. They have set up a payments channel between Singapore and India using Ripple’s blockchain network for near real-time remittances.
PNC Bank
PNC, a top 10 U.S. bank, was one of the first major banks to join RippleNet back in 2016. They have tested XRP, but do not currently use it for liquidity or payments.
MoneyGram
In 2019, Ripple purchased a $50 million stake in MoneyGram to deploy XRP for international payments and foreign exchange settlements. MoneyGram is one of the world’s largest remittance companies.
Siam Commercial Bank
Thailand’s oldest bank, Siam Commercial Bank, has partnered with Ripple to enable instant cross-border payments between Japan and Thailand. It is using Ripple’s multi-hop service to reduce reliance on USD for regional payments.
CIMB Group
Malaysia’s CIMB Group joined RippleNet in 2016 and plans to utilize Ripple’s blockchain network for instant payments across the region. CIMB operates in 15 countries including Cambodia, Thailand, and Indonesia.
Banks Testing and Piloting XRP
In addition to the banks already operational with XRP and RippleNet, there are dozens of other global banks that are currently piloting, testing and evaluating XRP’s use within their payment flows and settlement infrastructure. Banks with XRP pilot projects underway include:
- Barclays
- Credit Agricole
- Bank of America
- SABB Bank
- Cambodia’s National Bank
- Ahli Bank of Kuwait
- Woori Bank
- Krungsri Bank
- bankDhofar
The ongoing tests by these major banks demonstrate that there is significant and growing interest in using XRP to streamline cross-border payments and currency trades among global financial institutions.
Banks Investing in Ripple the Company
In addition to adopting Ripple’s technology and digital asset XRP, numerous banks are also direct investors in Ripple Labs the company. Notable financial institutions that have invested in Ripple include:
- SBI Holdings
- Banco Santander
- Standard Chartered
- Axis Bank
- CIBC
- MUFG
- BBVA
- Mizuho Financial Group
This strong investment and ownership from banks and financial institutions has given Ripple one of the highest valuations among crypto startups, reaching over $10 billion during the 2017-18 cryptocurrency bull market.
XRP Cryptocurrency Exchange Listing
In addition to direct usage and pilots by global banks, XRP is also listed on nearly all major cryptocurrency exchanges worldwide. These include top exchanges like Binance, Coinbase, Kraken, Bitstamp, and Bitfinex.
Widespread listing provides banks with ample liquidity options to directly source or trade XRP, as part of their usage of Ripple’s payment solutions.
Top Cryptocurrency Exchanges Listing XRP
- Binance
- Coinbase
- Kraken
- Bitstamp
- Huobi Global
- Bitfinex
- Bithumb
- Bitso
- Coinone
- BTC Markets
Regulatory Compliance
For banks to utilize any cryptocurrency like XRP, regulatory compliance is key. Ripple makes use of its native XRP token, but also provides fiat currency settlement through its xRapid platform. This allows banks to choose their preferred settlement medium based on their jurisdiction and compliance needs.
Ripple also has robust compliance systems like transaction monitoring, KYC onboarding, and sanctions screening to meet global AML and KYC regulations when XRP is used for liquidity and payments.
Framework for Global Regulatory Compliance
Ripple’s regulatory compliance framework includes:
- Transaction monitoring to identify suspicious activity
- User identification through KYC and AML procedures
- Sanctions lists screening against wallet holders
- Threshold reporting to regulatory agencies
- Anti-fraud and risk management systems
- Data protection and financial secrecy policies
This focus on compliance enables Ripple’s platform and XRP to operate within existing regulations applied to banks and financial institutions.
Conclusion
The usage and adoption of Ripple’s blockchain technology and associated XRP cryptocurrency continues to grow rapidly among banks and financial institutions worldwide. Attracted by its speed, low cost, scalability and liquidity, more than 300 banks globally are now partnered with RippleNet for cross-border payments.
While the number invested specifically in XRP remains lower, over a dozen major banks are currently settling transactions in XRP, conducting pilots, or utilizing it as a bridge currency for international settlements and trades. With dozens more banks at various stages of testing and evaluation, XRP is likely to continue seeing expanded adoption in banking and finance in coming years.
For banks and financial institutions, RippleNet and XRP offer a compelling way to significantly improve the speed, cost and scalability of global payments. And with Ripple’s robust compliance frameworks, this can be done while meeting KYC, AML and reporting regulations – enabling XRP to emerge as an increasingly important liquidity tool and settlement mechanism across the global financial system.
