The Royal Bank of Canada has released a reportm stating that Ripple’s various technologies, including the XRP Ledger, can save banks and financial institutions time and money. The report says, banks with Ripple or XRP can save an average of 46% on costs per transaction.
Back in February 2016, the Royal Bank of Canada (RBC) announced it was working on a new proof-of-concept based on Ripple technologies. The purpose was to evaluate how Distributed Ledger technology could affect different areas of the bank’s business when it is more widely implemented. The Royal Bank of Canada is the largest bank in Canada with more than 16 million clients.
Ripple saves time and money
According to a newly-released report, Ripple can eliminate the problems of the referral industry by eliminating middlemen, as well as reducing costs and increasing transparency. Remarkably, the Royal Bank of Canada refers not only to the xCurrent (not using the XRP token) payment solution, but also explicitly to the XRP ledger technology. The XRP token serves as the bridge currency for increased liquidity for banks to create.
In the publication, RBC writes:
“Ripple created an open source, peer-to-peer, decentralized protocol, with a network of participating financial institutions (RippleNet) and a series of individual technology solutions including payment processing (xCurrent), liquidity support (xRapid) and payment access (xVia).”
RBC also describes how xRapid works by using the XRP token:
“While not necessary for xCurrent and payment processing, we believe that it is helpful to use the “complete” solution as an example of how blockchain could disrupt the remittance market, including the use of XRP and its corresponding ledger. In this solution, XRP is used as a bridge asset, meaning that it is a store of value that can be transferred between parties without a central counterparty and thus support liquidity between any two currencies. As a result, banks can consolidate their liquidity into one XRP account instead of holding local currency in accounts around the world. By making markets directly between banks’ domestic currencies and XRP, banks minimize the number of intermediaries.”
XRP provides, according to RBC, transparency on foreign exchange rates and fees, even before the transaction is created. Overall, the test saved around 46% of the cost of a transaction. In addition, the transfer was highlighted in seconds, compared to traditional payment service providers that require several days for cross-border payments.
The Ripple technology savings study for banks is not the first of its kind. A report released a few months ago on xRapid active pilot projects said that with xRapid, financial institutions can save between 40 and 70 percent of their costs.