The banking system is in need of an upgrade and the Ripple protocol may be a prime candidate to replace the current infrastructure. International bank settlements can sometimes take days and comes with a lot of friction.
Using a proven blockchain as a settlement layer would not only save time, it could also increase profit potential by freeing up liquid capital that can be reinvested sooner. Here are three reasons why the Ripple protocol could one day upgrade the underlying SWIFT infrastructure.
#1: SWIFT has Security Flaws
SWIFT stands for “Society for Worldwide Interbank Financial Telecommunication” and has been the backbone of our modern banking system for 43 years. That said, their current infrastructure is showing signs of being outdated and may be in need of an overhaul.
SWIFT has been the target of multiple hacks with multi-million dollar bank heists. This may be creating a sense of urgency to upgrade to a more secure protocol.
#2: Banks are Already Investing and Using Ripple
Some banks have already been testing out the Ripple protocol for years. Every few months we’re seeing more banks forming strategic partnerships with Ripple. Today it was announced that Ripple Labs just raised $55M, while at the same time bringing in new banking partners.
Out of all the current blockchains, the Ripple protocol appears to be the best fit for the banking establishment. Unlike newer experimental chains, Ripple is already time tested and fully functional. The protocol deals primarily in credits traded between trusted gateways, which makes it suitable to our current credit based banking system.
#3: Ripple is Scheduled to Participate at a SWIFT Conference
Ripple Labs is scheduled to attend Sibos, a banking conference in Geneva organized by SWIFT. Executives from Ripple Labs will be showing several live presentations on cross-border payments.
Given the recent funding, partnerships and the fact they they already have a fully functional blockchain, it would come as no surprise if their protocol became the backbone of a new financial system.