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Ripple and SWIFT have been engaged in a race to develop a blockchain- or distributed ledger technology (DLT)-based banking solution for cross-border payments.

To date, Ripple's smaller bank member base has stood against it, as an effective DLT solution depends on amassing a wide network of users. Now, however, two new developments suggest Ripple may be building up its influence.

The Bank of England (BofE) hinted at Ripple technology's structural importance. In March, the Bank began working with Ripple on a cross-border payments proof of concept (POC) as part of its accelerator program. This week, the BofE said the test was successful, and while DLT is not yet mature enough to underpin its own real time gross settlement (RTGS) system, it is convinced of the importance of making its RTGS compatible with DLT solutions used in the private sector. This is a strong indication that the central bank recognizes the structural importance of Ripple technology, and others like it, in the interbank payments space, and believes changes to its own systems should be made to accommodate it.

In March, the Bank began working with Ripple on a cross-border payments proof of concept (POC) as part of its accelerator program. This week, the BofE said the test was successful, and while DLT is not yet mature enough to underpin its own real time gross settlement (RTGS) system, it is convinced of the importance of making its RTGS compatible with DLT solutions used in the private sector. This is a strong indication that the central bank recognizes the structural importance of Ripple technology, and others like it, in the interbank payments space, and believes changes to its own systems should be made to accommodate it. SBI Ripple Asia significantly expanded its membership. SBI Ripple Asia, a consortium of Japanese banks using Ripple's DLT-based cross-border payments solution, has been gaining members rapidly since launching less than a year ago, and this week, Ripple announced that membership is now at 61. All three of Japan's biggest banks — Sumitomo Mitsui Banking Corporation (SMBC), MUFG, and Mizuho — are now members, as well as another large national bank, Japan Post Bank. Ripple also announced that foreign banks based in Japan, as well as overseas institutions, are now being invited to join. The latest news suggests that, at least in Asia, Ripple is building up a powerful user base for its technology, and may soon attract a more international crowd if overseas players accept the invitation.

These latest developments suggest Ripple may be achieving the all-important network effect on two fronts. Discussion of the network effect crucial for scaling a DLT-based solution generally centers on a product's adoption by private groups of banks. Ripple seems to be making steady progress on this front, as SBI Ripple Asia's latest news suggests.

But even more significant may be the fact that institutions like the BofE now seem to be in favor of connecting to these private systems. That's because Ripple's network effect among private users could be amplified if central banks begin linking in to its networks, given the fundamental role of these players in the global financial system.

Nearly every global bank is experimenting with blockchain technology as they try to unleash the cost savings and operational efficiencies it promises to deliver.

Banks are exploring the technology in a number of ways, including through partnerships with fintechs, membership in global consortia, and via the building of their own in-house solutions.

Sarah Kocianski, senior research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on blockchain in banking that:

Outlines banks' experiments with blockchain technology.

Details blockchain projects at three major banks — UBS, Credit Suisse, and Banco Santander — based on in-depth interviews.

Discusses the likely trends that will emerge in the technology over the next several years.

Highlights the factors that will be critical to the success of banks implementing blockchain-based solutions.

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