Blockchain & The Future of Real-Time Payments · customers’ supplier payments on RippleNet,...
Transcript of Blockchain & The Future of Real-Time Payments · customers’ supplier payments on RippleNet,...
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GZ2T3MYZA5F3SSZUEPP7LM73SBF2IK66 1 CONFIDENTIAL
Blockchain & The Future of Real-Time Payments
Prepared for
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Agenda
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1. Payments Today
2. Intro to Blockchain & DLT
3. Leveraging DLT for Payments
4. Sample Use Cases
5. Impact of Payment Friction
6. Digital Assets and IoV
7. Q&A
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D I S P A R A T E
Different tech, systems of
record, messaging and rules
S L O W
1-3+ days to settle across
numerous intermediaries
O P A Q U E
Poor data flow inhibits
information transparency
E X P E N S I V E
High processing costs limit
addressable market and servicing
Today’s Inefficient Payments Networks
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ACH, FPS, CHAPS, etc.
Originating Bank
Beneficiary Bank
Ledger
Domestic Payments are Settled Through a CCP
There is no Universally Accepted CCP for Int’l Payments This makes international payments difficult
Ledger Originating
Bank (USD)
Beneficiary Bank (EUR)
Ledger
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There is no Universally Accepted CCP for Int’l Payments This makes international payments difficult
Ledger Originating
Bank (USD)
Beneficiary Bank (EUR)
Ledger
Originator
$
Originator
$
Originating Bank
€
Beneficiary
€
Originating Bank
€ Beneficiary
Bank
Beneficiary
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Low Visibility on Status
Originator Originator’s bank
Payment instructions
Beneficiary’s bank Beneficiary
Payment notification / Statement Reporting
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Correspondent bank
Limited Visibility and Uncertainty Result in Poor Client Experience
Sample Cross-Border Payment Today
No/Limited Fee Disclosure Limited Payment Details Uncertain timing Settlement Risk
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What Is a Blockchain?
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All Blockchain Use Cases Stem From Payments
Trade Finance
Securities
Insurance
Lending
Smart Contracts
P A Y M E N T S
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What Banks Do Not Like About Blockchain
● Scalability (blockchain has a global
transaction limitations)
● Transaction Privacy (public/shared
ledger)
● Interoperability (blockchain requires
everyone to use a single ledger)
● Usage of Digital Assets for
Transactions
Interledger Protocol
Addresses
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Originator Originator’s bank Beneficiary’s bank Beneficiary Correspondent bank
Enabling Real-time Settlement with Bi-Directional Messaging
Leveraging DLT for Cross-Border Payments
FX, Fees & Time Disclosed
Payment instructions
Validation & Compliance
Quote Accepted
Atomic Settlement
Payment Submitted
Payment Details
Status
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Sample Use Cases
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Bulk funding operations
on a monthly or
quarterly basis results in
idle cash.
Traditional “Bulk” Funding Process
Use Case 1: Spot Funding Operations
₹
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Real-Time, Cross-Border Payments Enables a Shift to Spot Funding
Use Case 1: Spot Funding Operations
₹
Spot funding reduces
idle cash, FX risk and
counterparty exposure
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CONFIDENTIAL PROPRIETARY AND CONFIDENTIAL; Contents are proprietary to Ripple and provided on the condition of confidentiality. Provided information may be disclosed,
reproduced and used only in accordance with a written agreement with Ripple. No implied licenses are intended and all rights are reserved.
Sweden | United States Corporate Payments
SEB, a Scandinavian bank, has pursued a
corporate payments use case with Ripple on
behalf of one of its corporate customers from
Sweden to the US. As of Q12018, SEB has
processed over $1B in volume over Ripple.
With Ripple, SEB has been able to reduce the
time to settle from hours to seconds.
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Many corporates will
require international
vendors to bid only in
their functional currency,
pushing FX costs to
suppliers.
Use Case 2: Vendor Payments Common Practice - Bidding in Buyer Functional Currency
Supplier
Quotes ($) $ Wire
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Use Case 2: Vendor Payments Recommended Process - Supporting Local Currency Pricing
Supplier
Quotes ₹
Bids compared
on parity basis
Supporting bidding in
multiple currencies can
result in lower supplier
costs.
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AMEX | Ripple
AMEX is building their SME and corporate
customers’ supplier payments on RippleNet,
creating a global network or clearing partners
around the globe.
This SME-tailored service is targeted to improve
servicing and drive customer acquisition. By
using Ripple, AMEX speeds the time to market,
lowers their cost and delivers a better customer
experience.
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AMEX | Ripple
AMEX is building their SME and corporate
customers’ supplier payments on RippleNet,
creating a global network of clearing partners
around the globe.
This SME-tailored service is targeted to create a
differentiated service and drive customer
acquisition. By using Ripple, AMEX speeds the
time to market, lowers their cost and delivers a
better customer experience.
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Payment
Provider
Many customers join RippleNet to create
new payment corridors that help them
improve their customer experience by
reducing the cost, or improving on the
customer experience.
This is done with the goal of driving new
revenue.
Standard APIs
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Payment
Provider
Bank
Corporate
Payment Provider
Bank
Bank
Payment Provider
Creating a Connectivity Standard
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Operational Impact of Cross-Border Payment Friction
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Reconciliation
Supplier Terms
Shipping Delays
Payments Fraud
Red Tape
Idle Cash
Forecasting
Excess Fees
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Digital Assets and The IoV
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O U R V I S I O N
The Internet of Value:
Enable the world to move money
like information moves today.
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Global Payment Demand on the Rise as Global Banking Reach Decreases
2002
26
2007
19
2005
22
2010
18
2012
14
2003
25
2013
13
2014
12
2015
12
225
176
145
113
55
8 2 .5 .25
Correspondent Banking
Relationships in thousands
Global E-Commerce Sales in billions
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2. Transfer
digital asset
Digital assets eliminate
the need for nostro
accounts or pre-funding
foreign accounts
$ ¥
1.Convert fiat to
digital asset
3. Convert
back to fiat
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26 INTERNAL
xRapid service
0. Quote estimate for
USD->MXN payment
1. Instructions for USD-
>MXN payment
6. Initiate local rail
payout in MXN
2. Exchange USD for XRP
3. Withdraw XRP
to receiving exchange
5. Exchange XRP
for MXN
4. XRP settled across
XRP Ledger
Payment Originator
CONFIDENTIAL
Sample Digital Asset Payment Using XRP
Payment Beneficiary
Total Transaction time = ~2 minutes
XRP exposure time = ~6 seconds
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Digital Asset Super Highway
The Current State and Path to Broader Adoption
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Q&A