Ripple’s CEO and Co-founder, Chris Larsen, sheds light on the evolving domain of cross-border payments.
FST Media: What is the ‘holy grail’ that is yet to be delivered in financial services?
Larsen: Interoperability is the holy grail of financial services. Today, the world’s payments infrastructure is siloed by company and country. This creates time, cost and communication friction that drags on all participants within a transaction. By enabling seamless interoperability, we will finally realise the full promise of the Internet of Value, the connected commerce applications of the Internet of Things, and a significant advancement towards worldwide financial inclusion. An important byproduct of this interoperability will also be real time global settlement and a quantum leap forward in efficiency and savings for financial institutions, which in turn will benefit governments and individual consumers.
FST Media: What are the new rules of engagement in the evolving domain of cross-border payments?
Larsen: The expectations have changed. No longer is three day settlement, high cost, and zero visibility acceptable. Banks, corporates and regulators understand that real time, cost effective and transparent settlement is both possible and in everyone’s best interest, which is why governments and financial institutions are all seeking solutions for real-time, global payments. This has officially moved off the drawing board and out of the lab into real world deployment and execution.
FST Media: What can we expect to see from Ripple in the coming months?
Larsen: We’re focused on building solutions to make cross-border payments faster, cheaper and more certain. In 2016, we expect to see banks adopting Ripple for more narrowly focused cross-border payment use cases such as remittances, supply chain financing and trade finance.
We are also implementing Interledger Protocol (ILP) in our solutions to allow banks to instantly and securely send payments across any ledgers (centralised or distributed with unlimited scalability and control over privacy of transactions and denomination of fees.
FST Media: What is your vision for the Interledger Protocol and how will this shape the payments landscape?
Larsen: The ability for banks to send low-cost, instant cross-border payments will lay the foundation for an Internet of Value, in which value moves as easily as information moves on the Internet today.
We envision a future Internet of Value which operates across multiple distributed ledger technologies and applications. There will be many companies providing many ledgers for many different use cases, and we believe Ripple will be a preferred cross-currency settlement technology used by the world’s banks. In support of this vision, our ILP provides a free, open source and neutral web protocol for efficient and safe payments across payment networks. ILP enables interoperability between the world’s ledgers – both centralised and distributed – and delivers the core benefits of multi–currency distributed ledger technology with infinite scalability.
The introduction of the ILP will give us the ability to interconnect ledgers of any kind – be they bank ledgers, PayPal ledgers, or M-Pesa ledgers. Ultimately, we believe interconnectivity of the world’s payment systems will be a key part of building the broader Internet of Value.
FST Media: How do you encourage a culture of innovation in your team?
Larsen: Our team is a diverse group of individuals who deeply understand the worlds of banking, regulation and technology. We are passionate about building solutions that pave the way to the Internet of Value, and we work closely with our banking customers to understand their pain points and build innovative technologies that can solve the inefficiencies they face today.
FST Media: How significant is Australia as a target market for Ripple’s expansion into Asia Pacific?
Larsen: Australia has long been a key market for Ripple, which is why we opened our first international office in Sydney last April. Cross-border payments are growing at 6 per cent a year according to McKinsey, with the majority of that growth happening in Asia Pacific. Australia is home to four of the world’s top 50 global banks and as such continues to be a key regional hub for cross-border payments.
FST Media: What does disruption mean to you?
Larsen: I believe that true disruption is bringing exponential change to the status quo. Many people believe that disruption requires supplanting the status quo, but I don’t think that is necessary in all cases. Take for instance our work in the cross border payments sector. We are disrupting the way that things have always been done – delivering real-time affordability and certainty – but doing so in partnership with established financial institutions and globally respected players like CGI and Accenture. We believe a collaborative approach is more effective than a fully disruptive one.