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Real-time cross-border commercial payments using DLT


Currently, most cross-border corporate payments take a day or more to reach their destination, and take place only during business hours—resulting in delays, inconvenience and expensive maintenance for SMEs and corporates. This, in turn, only challenges banks’ ability to enable real-time transactions.

Distributed ledger technology (DLT) could change that. The technology is expanding and maturing quickly. Bitcoin, the original distributed ledger, has run continuously and securely since 2009. More than 600 alternative distributed ledger networks have appeared since, including Ripple, which launched in 2012.

The investments continue to pour in. As of Q1 2016, more than US$1.1 billion of venture capital has been invested in DLT, corresponding to a 60 percent increase since Q1 2015.

Despite the rate of growth, DLT uptake is still developing. Banks can see this as an opportunity, especially for their cross-border and inter-bank commercial payments. Real-time gross-transfer system Ripple, which is built on DLT, is now focusing on these areas. Their vision for correspondent banking—particularly for commercial payments and trade finance—is a 24x7, real-time, information-rich, synchronous and transparent operation.

It’s time for banks to zero in on DLT as a means to extend swift and seamless customer service—or be disrupted.


Ripple is a DLT solution for cross-border payments, and has robust technology that has proven its mettle. It has its own native digital asset—XRP—which can be used for settlement to reduce liquidity costs. It is also built on a flexible architecture—Interledger Protocol—that does not require use of a cryptocurrency.

Ripple integrates the messaging required to clear payments between the sending and the beneficiary banks, with the settlement process required to settle the fiat funds between those banks.

It also lowers the total cost of settlement by empowering banks to send and settle money instantly. It creates new revenue opportunities by enabling access to new markets and new products such as micropayments.

The Ripple enterpriseD solution is mature enough to launch and scale a cross-border payments network. A consortium of banks is being formed to use this Ripple technology to keep ahead of the competition.


There are thousands of banks worldwide reachable through correspondent banking and engaged in cross-border payments. It is not practical to link all these banks immediately into a new network using DLT, nor to expect rapid migration to full-scale volume.

Here are the actions banks should take to set-up a cross-border payments network using distributed ledger technology:

  • Start small, then scale up. Starting small, implementing DLT technology iteratively, allows learning by doing and a gradual rollout that can be scaled steadily in a contained and controlled way.

  • Know the "known knowns." Each bank can then make internal preparations—they know their IT systems, business processes, regulatory obligations, customers, revenues and business volumes.

  • Define the controls—the "known unknowns." Banks in the network need to collaborate to analyze and define the controls, operating rules and the governance around them, but initially only to the detail required to start the network.

  • Assess the growth scenario—the "unknown knowns." These require a strategy for the rollout to customers, customer acquisition, products and services to offer, transaction growth rates, new revenue streams and the impact on correspondent banking.

  • Be agile and predictive—the "unknown unknowns."  Banks will have to be respond and adapt rapidly to the dynamic demands of the network in order to evolve into the most robust end state.