It all started with the distinctive screech of Telex machines across banks all over the world. But “you are too young to recall” it, says Dilip Rao. His colleague Sagar Sarbhai interrupts him to note, “I was not born then. I’m pretty sure he was not born either,” he says, motioning towards Rao.

Rao is the global head of infrastructure innovation at payments technology company Ripple and Sarbhai heads the government and regulatory relations for APAC and the Middle East at the firm. They are talking about the era before the Society for Worldwide Interbank Financial Telecommunication (Swift) which provides a messaging network to banks. The four-decade-old service is used by 11,000 banks around the world and handles around half of the world’s high-value cross-border payments.

Except no technology can go 40 years without hiccups and promising competition. Ripple, a company growing fast in the distributed ledger technology (DLT) space within the global payments market, is giving Swift a tough challenge on both fronts.

Oldschool Swift isn’t fit to process low-value payments which are in abundance in many global corridors, an underserved market that banks want to tap into. It is in these corridors, right now, that Ripple is being adopted by banks. Ripple can handle large as well as low-value transactions a lot faster and cheaper than Swift. This poses a threat to the incumbent’s very existence.

The global payments market is huge and it is vital to the topline of banks. In 2016, the global payment revenues stood at $1.6 trillion and accounted for 34% of overall banking revenues. It is estimated to become a $2 trillion industry by 2020 which will contribute 36% to the overall banking revenues, according to a report by management consulting firm McKinsey.

Today, Swift, to put it mildly, is not so swift. The messaging network could take hours or days to pull off transactions that Ripple can settle within seconds. Besides, Swift has not kept pace with innovation and improvements either.

Many former and current senior members claim that the messaging platform has been cognizant of its weaknesses but has not taken prompt measures to address them. In fact, the infamous Punjab National Bank fraud could’ve possibly been avoided had it not been for a vulnerability in the Swift system, suggests Ripple. “The perpetrators of the fraud uncovered a vulnerability where the system that sent the message of a payment was not linked to the system that actually settles the payment,” Ripple said in an email response to a questionnaire sent by The Ken.

Not just that. In the Bangladesh Bank robbery of 2016, hackers were able to steal $81 million by using a malware which allowed them to hack into the bank’s Swift software.

Ripple claims to have a fix. Many in the distributed ledger technology (DLT) space are trying to push out incumbents like Swift, but where most of them have a hammer and are still in search of a nail, it appears Ripple may just have hit it on its head with cross-border payments.

AUTHOR

Sidhartha Shukla

In his earlier stint at Moneycontrol, the website owned by the Network18 group, Sid wrote on cryptocurrencies, cybersecurity, business, and finance. Born in Raipur, Chhattisgarh, Sid has spent most of his life in Jalandhar, Punjab. He has a BSc in Mathematics from St Xavier’s College, Mumbai. Sid is a comic book nerd and a big fan of Alan Moore, Neil Gaiman and Brian Azzarello. He can be reached at sidhartha at the rate the-ken.com

View Full Profile

Subscribe to read this story

The Ken is the only business subscription you need. Questions?

 

Premium

  • 5 original and reported longform business stories every week
  • Access to ONLY India edition
  • Close to 250 exclusive stories every year
  • Full access to over 5 years of paywalled stories
  • Pick up to 5 premium subscriber newsletters
  • 4 original and reported longform business stories each week
  • Access to ONLY Southeast Asia edition
  • Close to 200 exclusive stories every year
  • Full access to all paywalled stories since March 2020
  • Pick up to 5 premium subscriber newsletters

Rs. 2,750 /year

$ 120 /year

India Edition
Subscribe Subscribe
Most Asked For

Borderless

  • 8 original and reported longform business stories each week
  • Access to both India and Southeast Asia editions
  • Close to 400 exclusive stories every year
  • Full access to over 5 years of paywalled stories across India and Southeast Asia
  • Unlimited access to all premium subscriber newsletters
  • Visual Stories

Rs. 4,200 /year

Subscribe
 

Echelon

  • 8 original and reported longform business stories each week
  • Access to both India and Southeast Asia editions
  • Close to 400 exclusive stories every year
  • Full access to over 5 years of paywalled stories across India and Southeast Asia
  • Unlimited access to all premium subscriber newsletters
  • Visual Stories
  • Bonus annual gift subscription
  • Priority access to all new products and features

Rs. 8,474 /year

Subscribe
Or

Questions?

What kind of subscription plans do you offer?

We have three types of subscriptions
- Premium which gives you access to either the India or the Southeast Asia edition.
- Borderless which gives you complete access to The Ken across both editions
- Echelon which gives you complete access to The Ken across both editions along with a bonus gift subscription

What do I get if I subscribe?

The Premium edition gives you access to stories in that edition along with any five subscriber-only newsletters of your choice.

The Borderless and Echelon subscription gives you complete access to The Ken across editions and unlimited access to as many newsletters as you like.

What topics do you usually write about?

We publish sharp, original and reported stories on technology, business and healthcare. Our stories are forward-looking, analytical and directional — supported by data, visualisations and infographics. We use language and narrative that is accessible to even lay readers. And we optimise for quality over quantity, every single time.

Our specialised subscriber-only newsletters are written by our expert, award-winning journalists and cover a range of topics across finance, retail, clean energy, cryptocurrency, ed-tech and many more.

How many newsletters do you have?

We are constantly adding specialised subscriber-only newsletters all the time. All of these are written by our team of award-winning journalists on a specialised topic.

You can see the list of newsletters that we publish over here.

Does a Premium subscription to your Indian edition get me access to the Southeast Asia edition? Or vice-versa?

Afraid not. Each edition is separate with its own subscription plan. The India edition publishes stories focused on India. The Southeast Asia edition is focused on Southeast Asia. We may occasionally cross-publish stories from one edition to the other.

We recommend the Borderless or the Echelon Plan which will give you access to stories across both editions.

Do you have a mobile app?

Yes! We have a top-rated mobile app on both iOS and Android which allows you to read on-the-go and has some amazing features like the ability to bookmark stories, save on your device, dark mode, and much more. It’s really the best way to read The Ken.

Is there a free trial?

You can sign up for a free account to experience The Ken and understand our products better. We’ll send you some free stories and newsletters occasionally, and you can access our archive of previously published free stories. You can stay on the free account as long as you’d like.

The vast majority of our stories, articles and newsletters can be accessed only by a paid subscription.

Do you offer any discounts?

Sorry, no. Our journalism is funded completely by our subscribers. We believe that quality journalism comes at a price, and readers trust and pay us so that we can remain independent.

Do you offer refunds?

No. We allow you to sample our journalism for free before signing up, and after you do, we stand by its quality. But we do not offer refunds.

I am facing some trouble purchasing a subscription. What can I do?

Just write to us at support@the-ken.com with details. We’ll help you out.

I have a few more questions. How can I reach out to you?

Sure. Just email us at info@the-ken.com or follow us on Twitter.