Fintech startup Ripple Labs is banking on blockchain technology to help it overtake the decades old Swift network behind the majority of the world’s financial and security transfers, according to its chief executive Brad Garlinghouse.
Blockchain technology works as a decentralised ledger and removes the need for money to be processed through accounts at a central authority.
The boss of the San Francisco-based company said Ripple has attracted a number of new customers as financial firms look to frontier technologies such as blockchain to solve logistical issues posed by older software.
Swift, which was first formed in 1972 and stands for the Society for Worldwide Interbank Financial Telecommunications, is being used by both companies and individuals to send and receive money. It currently has more than 11,000 customers involved in the corporate sector and capital markets across 200 countries.
Ripple was founded in 2012 and uses its XRP cryptocurrency as a proxy for customers looking to convert fiat currencies.
Its promise to provide liquidity for payments has allowed Ripple to partner with a number of institutional finance companies such as Standard Chartered and American Express.
“The technologies that banks use today that Swift developed decades ago really hasn’t evolved or kept up with the market,” said Mr Garlinghouse in an interview with Bloomberg.
“Swift said not that long ago they didn’t see blockchain as a solution to correspondent banking. We’ve got well over 100 of their customers saying they disagree.”
In September, investment bank JP Morgan announced plans to roll out its blockchain payments plan to a network of more than 75 different banks including Santander and Société Générale.
Banks are looking at the technology as a means of improving the efficiency of cross-border payments, which are often complicated by the involvement of regulatory compliance checks and missing data that can delay transactions for weeks.
Rumours have circulated about a potential tie-up between Ripple and Swift, but Mr Garlinghouse denied the claims.
“What we’re doing and executing on a day-by-day basis is, in fact, taking over Swift,” he said.