Ripple Labs has signed two US banks to its bitcoin-inspired payments network, which allows institutions to conduct low-cost international money transfers without the intermediation of large Wall Street banks.
Cross River Bank, an independent transaction bank based in New Jersey, and CBW Bank, a century-old institution founded in Kansas, join Germany’s Fidor Bank, which became the first the bank in the world to utilise Ripple for sending real-time money transfers this May.
San Francisco-based Ripple Labs offers a decentralised order book relying on open-source peer-to-peer payment protocols to speed the transfer of financial information.
“Our business customers expect banking to move at the speed of the Web, but with the security and confidence of the traditional financial system,” said Gilles Gade, president and CEO of Cross River Bank.
“Ripple will help make that a reality, enabling our customers to instantly transfer funds internationally while meeting all compliance requirements and payments rules. We are excited to be amongst the very first banks in the U.S. to deploy Ripple as a faster, more affordable and compliant payment rail for our customers.”
These are key areas that the Ripple model addresses for America’s regional and community banks. While Cross River Bank and CBW are hardly household names, they may be the first of many to attempt to recover control over a cross-border commercial banking businesses that has long been under the thumb of larger institutions like J.P Morgan & Co., HSBC Holdings, Standard & Chartered and Wells Fargo.
Any U.S. bank can now use Cross River or CBW Bank as a correspondent to move funds in real-time to any other institution in Europe via Germany-based Fidor, and attain low-cost cross-border transfer services to other similar sized banks in the US. Avoiding interaction with ‘correspondent banks’, says Patrick Griffin, Ripple Lab’s executive vice-president of business development, should also do away with the accompanying fees, foreign exchange “spread” costs and, most importantly, the large collateral commitments that the bigger banks periodically demand to act as the middleman.
The deals will also help expand liquidity and trade volume on the protocol and generally improve the network effects of the system—which, Ripple hope, will continue to make their protocol more attractive for both market makers and developers.
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