Ripple entered the global financial industry with two products - XRP digital token, and RippleNet money transfer messaging system. Though, most of the banks and financial institutions have yet to show much interest to accept these products for their wire transfer business, such negative attitude of banks to any new product is usual and is regarded as initial response. Eventually, banks will have no choice other than accepting these products, especially when customers will demand these. It is the customer, not the bank, who ultimately matters in creating demand of a new and innovative product.

As customers' pressure for introducing alternative solution to their money transfer need is intensifying, the banks and financial institutions will not be able to refrain from using the new technology for a long time. The days are not far off when customers will compel the banks to accept this technology as they are the main driving force in transferring money across the world. Because of customers' pressure, many informal money transfer companies have emerged in the market bypassing traditional banks and have gained immense popularity among customers. MoneyGram and Western Union are two vivid examples of this process. Even many banks are now allowing their customers to use various online applications to transfer money so as to retain their customers and compete with these informal remittance houses.

SUBSTITUTE TO SWIFT: Ripple has already emerged as the main business rival of SWIFT. If Ripple can continue their present pace of operations, very soon it will become a suitable substitute to SWIFT. Not only Ripple, but also some other players who have money transfer products similar to SWIFT, have already arrived at the word financial industry. Santander UK is in the process of introducing special application based on Ripple technology. This apps will be used to remit money through mobile phones across the world within a minute. Standard Chartered Bank has already introduced special program for transferring money for their corporate customers between India and Singapore. Apart from these, many mobile apps are already in the world financial market and a good number of informal as well as formal money transferring companies are using these apps.

SWIFT'S INNOVATION: SWIFT is also watching this development in the global money transfer industry and has taken emergence of their potential competitors very seriously. It is not sitting idle in this changing scenario; rather it has started to bring about qualitative changes to its services and has upgraded its system to maintain edge over their competitors. It has already installed GPI (Global Payment Innovation) in their system which will enable banks' corporate customers to directly execute payment within an hour. This system will even allow the remitters as well as beneficiaries or receivers to monitor and track payment during the messaging period i.e. from originating unit to the ending unit where money will be eventually credited. If this tracking system can be properly utilised, any mishap in the wire transfer system can easily be averted. More than 30 banks have already started using this GPI system although this product is only one-year-old.

OVERCOMING RIPPLE'S INITIAL HURDLE: Ripple is facing hurdles from commercial banks who are the main users of this facility. They are still reluctant to adopt this application in their wire transfer business. Besides, the regulator is dragging its feet on the issue of giving approval to virtual currency. However, these initial hurdles will not last long as RippleNet is gaining popularity and acceptability day by day. The main product of the five-year-old Ripple, RippleNet, was launched just one year ago. Many banks have already shown interest to use this product. Virtual currency is gaining such popularity that the days may not be far off when US regulator will approve this currency. This new technology has very good prospect in the world financial industry.

SWIFT HAD TO FOLLOW SAME PROCEDURE: Historically, launching of any new product has never been smooth as it has to go through some challenges and RippleNet is not exception to it. SWIFT had to go through the same procedure while replacing traditional test-based telegraphic transfer (TT) and demand draft (DD) with their products. Many banks were not only reluctant but also resisting this service pointing out the uncertainty of sending money without any test arrangement. Initially, WIFT had to convince all the large banks and financial institution to use this facility in the global wire transfer system. And when large banks and financial institutions were brought under SWIFT network, other banks got encouraged to adopt it.

RippleNet will not be the replacement of SWIFT, but this will emerge as a suitable alternative service of money transfer facility. Experts are in the opinion that RippleNet is going to throw a big challenge to SWIFT as banks, financial institutions and customers will not have to exclusively depend on SWIFT for transferring money.

Banks in Bangladesh should carefully follow the progress and development of RippleNet as an alternative money transfer messaging system. They can maintain close contact with Ripple to learn the pros and cons of the two of its products - XRP and RippleNet - to remain in an advantageous position when these products will be introduced worldwide.

The writer is a banker based in Torento, Canada.

nironjankumar_roy@yahoo.com