On December 23, Fintek.pl interviewed Marjan Delatinne, Global Head of Banking at Ripple. Here is the interview:
Fintek.pl: How can you describe the Ripple business model?
Marjan Delatinne, Global Head of Banking : Ripple is a technology company that provides the most efficient money transfer solutions worldwide. Our products are based on blockchain technology. We use it to record every transaction. Blockchain enables faster, more cost-effective, secure and reliable cross-border payments. We also use digital assets, i.e. XRP. It allows you to provide real-time liquidity and transfer funds in various currencies around the world.
Using blockchain, XRP and modern APIs, Ripple allows all institutions that are part of our network, i.e. RippleNet, to transfer money to virtually any place in the world in an instant, reliable and cheap way. Our vision is to enable the world to transfer money just as much as information is being sent today. This is the vision of Internet of Value.
Our business model focuses on solving three key payment problems for our clients. The first is speed and confidence. By joining RippleNet, financial institutions can immediately transfer payment information in real time and settle it immediately – without any breakdowns.
The other is liquidity management. Institutions that choose RippleNet can easily obtain liquidity on demand using XRP. The third issue is transparency – in RippleNet every transaction is transparent.
Fintek.pl: What is XRP and what are the advantages of this cryptocurrency over Bitcoin?
MD: First of all, I want to explain that XRP is not a Ripple token. XRP is a digital resource built for payment, and Ripple is a programming company that exists independently of XRP. Owning XRP does not give any shares in Ripple.
Ripple uses XRP to provide banks and payment providers with a reliable solution to obtain liquidity for cross-border payments. For payments, XRP has a clear advantage over other tokens. First of all, it is faster (3.7 seconds / transaction), cheaper (0.0003 USD / transaction) and is scalable – it supports 1500 transactions per second. Bitcoin uses a different protocol that has been proven to have serious scalability and energy efficiency issues.
Fintek.pl: Cryptocurrencies are often referred to as the largest “economic bubble” of the 21st century. Do you think the crypto factor adds real value to the economy?
MD: Historically, there has been a lot of hype in the crypto industry. There are many players on the market who work on experimental solutions – we know about 3,000 various crypto assets. What problems do they solve? If they are used only for speculation, they do not really solve any customer problem. Today, people expect goods and services that will be delivered immediately and easily. For example, when ordering Uber, the entire travel process is a matter of one touch of a smartphone. This is also expected of financial systems. Cryptoactivity is a great opportunity for banks to be able to make faster, cheaper and more scalable payments for their clients.
Using what digital assets can do to streamline transactions is a journey we’ll be making for at least the next decade. It is clear that most of the market is aware that some digital assets have real value, but technology must become more user-friendly to achieve mass market acceptance.
Over the next two years, we expect the market to shift attention to usability testing – to see how crypto technologies solve customer problems. Without this, digital content would not be able to fully use its potential. That’s why at Ripple we focus on solving problems with the underlying infrastructure to make it easier for financial institutions to use digital resources such as XRP.
Fintek.pl: Good, but how do you use blockchain? Do you think this technology is the future of financial markets?
MD: In our opinion, the combination of blockchain technology with digital assets is the future of financial services, in particular in the settlement of cross-border payments. Our Blockchain in Payments report shows that already 97% of respondents are implementing or analyzing the possibility of using blockchain technology to achieve their business goals. Such a large increase in interest and the potential to implement digital assets is the result of greater market awareness of the benefits offered by blockchain, as well as increasing competition in cross-border payment transfers – this drives innovation in the entire industry.
Fintek.pl: It seems that SWIFT system is probably your biggest rival.
MD: SWIFT still uses the same one-way messaging and is not connected to any billing process. SWIFT does not deal with liquidity management and transaction settlement, which is a big part of the problem for banks. In addition, SWIFT is used for high value banking and low turnover payments while RippleNet is used for high turnover but for smaller value transactions, mainly to / from emerging markets.
The fundamental nature of payments is changing – electronic commerce is responsible for more than 20% of them today. Therefore, many of our clients are payment service providers operating in emerging markets and specializing in other types of payments. Ripple’s new clients and partners include MoneyGram, Faysal Bank in Pakistan, bKash in Bangladesh and QNB in Qatar. In Europe, we work with TransferGo, Santander, Ria, Finastra, the Swedish bank SEB, Euro Exim Bank in the UK and many other payment providers. We have crossed the barrier of 300 clients in over 45 countries and on 6 continents.
Fintek.pl: Together with Santander Group, you have developed the One Pay FX application, which is also available in Poland. How it’s working? In which countries can it be used?
MD: Santander One Pay FX is the first mobile application with Ripple support for cross-border payments. One Pay FX uses blockchain-based technology to provide a fast, simple and secure way of international transfers. The application offers what customers expect from a bank such as Santander, i.e. transparency, trust and a high level of service. One Pay FX gives Santander customers the option of making USD payments to the US, payments in Polish zlotys to Poland and transfers in euros to 19 countries in the eurozone.
International payments made via the application reach their destination in one day, compared to an average of three to five days for traditional transfers. In addition to Poland and the USA, the application can be used in Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia and Spain.
Fintek.pl: JP Morgan develops its own stablecoin – JPM Coin. Is this competition for you?
MD: We don’t see JPM Coin as competition. JPM Coin is linked to the 1-1 dollar , which means that JP Morgan transfers digitized dollars internally within its network, available only to large corporate and institutional clients.
Banks and financial institutions need an independent digital resource to enable truly efficient settlement and we believe that XRP is best prepared for this role. The solution of one bank may not work for another – building somewhat closed ecosystems creates new risks for contractors. Digital assets are unique because they are universal currencies, which means that anyone can use them as units of value around the world.
Fintek.pl: Ripple is one of the largest American fintechs. So what do you think about the Polish market and how could you compare it to the American one?
MD: The fintech market in Poland has great potential. It is very competitive, with a large number of qualified talents. In addition, the Polish government views fintech as one of the strategic sectors, in addition, many digitally mature banks operate on the market. The Deloitte report shows that Poland is a regional leader in technology development and implementation of modern solutions in the banking sector. Poland is a pioneer in this part of Europe in the field of implementing interbank mobile payments, and is also recording an increase in the number of contactless cards – these are the right conditions to create one of the leading fintech hubs in Europe.
Fintek.pl: What advice would you give young fintech startups? What is the key to success in this industry?
MD: First of all, you can’t create technology looking for a problem to solve. First you need to fix this problem and only then build a product that will face existing business challenges. With so many players on the fintech market, determining if you have the right solution is not difficult. Furthermore, it is important that fintech conducts research, knows the size of the market and the competitive environment, and how other products work. This helps you not to get lost in the information noise. Another issue is knowledge of laws and regulations on the market in which you operate. Without it, a fintech startup can quickly lose the opportunity to provide its revolutionary service to the market.
Fintek.pl: Thank you for your reply.