Royal Bank of Canada: XRP and Ripple, saving banks, 46% of costs

Royal Bank of Canada: XRP and Ripple, saving banks, 46% of costs

Home News Royal Bank of Canada: XRP and Ripple, saving banks, 46% of costs

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Marcus Misiak –
11 Tuesday 2018

The Royal Bank of Canada has released a report that says that the various technologies of Ripple, including the XRP Ledger, banks and financial institutions a lot of time and money can save. The report States that banks with Ripple or XRP can an average of save 46% on cost per transaction.

Already in February 2016, the Royal Bank of Canada (RBC) announced that it is working on a new Proof-of-Concept that is based on Ripple technologies. The objective of this proof of concept was to evaluate how the Distributed Ledger technology could have an impact on different business areas of the Bank, if it will be wider implemented. The Royal Bank of Canada is the largest Bank in Canada with more than 16 million customers.

According to the report, now published report Ripple can eliminate the problems of the remittance industry by eliminating middlemen, as well as costs are reduced and transparency increased. Remarkably, the Royal Bank of Canada not only refers to the payment solution xCurrent (which does not use the XRP-Token), but also explicitly on the XRP Ledger technology, the XRP-Token is used as a bridge currency, to generate an increased liquidity for banks.

In the publication, the RBC (freely translated) says:

Ripple has) a decentralized Open-Source Peer-to-Peer Protocol, with a network of participating financial institutions (RippleNet) and a number of individual technology solutions such as payment processing (xCurrent), liquidity support (xRapid) and payment access (xVia.Although it is not for xCurrent and the payment processing is necessary, we believe it is helpful to use the “full” solution as an example of how the Blockchain the transfer market could interfere, including the use of XRP and the corresponding Ledger.

In the Following, the RBC describes the function of xRapid, that the XRP tokens used:

In this solution, XRP is used as a bridge currency, which means that it is a memory that can be transferred between parties without a Central counterparty, and thus, the liquidity between any two currencies supported. As a result, banks can consolidate their liquidity on a single XRP account, instead of the local currency in Bank accounts throughout the world. By the markets to be made directly between the national currencies of the banks and XRP, minimize the banks the number of Intermediaries.

A more detailed description of the functioning and the advantages of XRP, we have already published in this article.

Furthermore, XRP, the RBC, transparency about exchange rates and fees, before the transaction is created. Overall, savings in the Test, approximately 46% of the cost of a transaction. In addition, the Transfer in a matter of seconds is highlighted, compared to the traditional payment service providers, such as SWIFT, in need of part of several days for cross-border payments.

The study of the saving potential for banks by the Ripple technologies is not the first of this kind. In a few months ago published report on the active xRapid-pilot projects, it was said that financial institutions with xRapid can save as much as 40 and 70 percent of the cost. Whether and how XRP in the traditional banks and the financial industry can prevail, however, remains yet to be seen.