FinExtra recently published an article by Apifiny CEO, Haohan Xu, highlighting the urgent need for banks to up their game in clearing and settlement for remittances and payments.

In the article, “It’s About Time – Disruptive Settlement Technologies Are Coming to Banks,” Mr. Xu highlights how the dawn of the Internet accelerated the international flow of information to the point where it is now instantaneous. The article goes on to describe how much the transfer of value lags the transfer of information in terms of speed and expense. While email, news, and independent movies can flash across the planet with a keystroke, the speed and expense of cross-border currency transaction settlement have seen little improvement during the past 20 years.

Settlement still takes two full business days after order execution for most stock trades. And the majority of international money transfer services still take 3 – 5 business days to complete a cash wire across countries. Customer expectations have changed while technology has not. Why? Cross-border payments transfer via agency banks in different countries to complete settlement because every mainstream fiat currency has its own independent cross-border payment settlement system.

The article goes on to explain the magnitude of clearing & settlement opportunity and volume for traditional players such as:

  • Society for Worldwide Interbank Financial Telecommunications (SWIFT), which clears five trillion dollars a day
  • Clearing House Interbank Payment System (CHIPS), which is responsible for another 1.5 trillion dollars of interbank payments in cross-border and domestic settlement daily.
  • Depository Trust and Clearing Corporation (DTCC) oversees transactions totaling trillions of dollars worth of securities every day.

A Better Way for Banks 

Mr. Xu continues to describe the wave of next-gen distributed ledger technology (DLT) technology arriving for the banking industry.

  • Ripple‘s, RippleNet global payments network, for which mass adoption has arguably been slow so far, with the volatility of its XRP cryptocurrency making banks nervous to employ the system, save for its XCurrent Messaging technology.
  • Baton Systems and Copper, (which announced recently its ClearLoop system for instant settlement of crypto trades off-exchange.
  • Roxe, which goes beyond DLT and leverages blockchain technology to create a unified clearing and settlement network that connects banks and the global financial system at-large. Roxe will purportedly enable instantaneous, and more reliable, global asset transfers for banks.

With these innovations coming fast, Mr. Xu argues that banks must rethink how they can speed up settlement and satisfy increasingly impatient customers.

 

Read the Full Article: “It’s About Time — Disruptive Settlement Technologies Are Coming To Banks