On day one of Money20/20 Europe, leaders from the world’s biggest banks to newly minted FinTech startups focused on two themes – innovation and partnership – with much of the conversation centering on the increasingly important role of blockchain technology across the industry.
Ripple CEO Brad Garlinghouse took the conversation one step further. In his fireside chat entitled, “Blockchain, digital assets and reimagining global payments,” Garlinghouse bluntly informed moderator Simon Taylor, co-founder of 11:FS, that “experiments are not a business model” and called attention to the hype outpacing reality in the blockchain and crypto space – noting that “it’s way out of whack.”
“Ripple is going deep with customers, solving real problems and seeing real progress,” Garlinghouse went on to say. He explained that Ripple uses blockchain technology and the digital asset, XRP, to address the major pain points in cross-border payments – making them dramatically faster (from days to minutes), lower cost (40-70% savings) and more transparent (similar to other banking services today).
But Garlinghouse was also quick to point out the difference between Ripple’s solutions and other services, such as Apple Pay, that put a slick front-end on the same old infrastructure.
“Everything that happens below these services – down the stack – hasn’t changed. Ripple’s point of view is that to truly unlock innovation in the payments ecosystem, you have to start way down at the bottom,” Garlinghouse explained. “If you can reset the rail – the base layer – you can really unlock innovation.” In this way, Ripple is just an enabler, a new base layer on which others can build.
So, what would compel banks, in particular, to replace this old infrastructure, questioned Taylor? Garlinghouse provided some color. For Ripple’s customers – everyone from banks to payment providers to corporations looking to improve international payouts – the business case for leveraging blockchain and digital assets is an easy one.
“As a society, we are relying on rails built 50 years ago to enable cross-border transactions,” said Garlinghouse. “Our customers are asking themselves: ‘If I want to be competitive for the next 10 years – for the next 50 – do I want to be dependent on what is effectively a horse and buggy system in a world of Teslas?’”
Garlinghouse was not alone in calling attention to problems with global money transfer. In discussing with Charlotte Hogg, CEO Europe at Visa, the needs of merchants at PayPal, Jim Migats, head of global core payments, noted that cross-border payments should be as easy and affordable as any kind of payment that exists.
Similarly, Ralph Hamers, CEO of ING, used global payments in his keynote as an example of a traditional offering rife for change. This was after emphasizing that banks and financial institutions can no longer differentiate through a product—that they must differentiate through a service or experience.
The conversation then turned to the digital asset, XRP. Garlinghouse shared how Ripple uses XRP as “a tool to fund real-time liquidity” during transactions. Taylor pointed out that XRP provides an alternative to pre-funded nostro and vostro accounts around the world.“
Finally, Garlinghouse highlighted that XRP and the XRP Ledger are open source, and Ripple is only one participant in the XRP ecosystem, that many participants use the asset and build on the XRP Ledger.
When Taylor pointed out that Ripple owns a lot of XRP, Garlinghouse clarified, “Ripple today owns about 60% of XRP. We continue to use it for various incentives to try and build the XRP ecosystem. We have announced a number of different programs around the world – ranging from accelerator programs to those that gain customer adoption.”
One of those program, Garlinghouse concluded, is Ripple’s new University Blockchain Research Initiative. He said, “We’re working with 17 universities around the world and we’re contributing to $50M to fund research in blockchain and cryptocurrency. All boats rise.”
For more, listen to Garlinghouse and Taylor’s discussion on 11:FS’s FinTech Insider podcast on Thursday, June 6.
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