Ripple & XRP can save banks an average of 46% per payment: Royal Bank of Canada
Ripple and XRP can save a huge amount of money and time of banks and financial institutions, according to a Royal Bank of Canada report. According to the report, Ripple, with or without XRP, can save banks an average of around 46% per payment.
By market cap, the Royal Bank of Canada is the largest bank in Canada, with over 16 million clients. Predominantly, consumers are known to use traditional channels including commercial banks, retail money transfer operators, such as MoneyGram (MGI), Western Union (WU) or online transfer providers like TransferWise or PayPal (Xoom), for C2C transfers.
However, Royal Bank of Canada believes that blockchain addresses the pain points of the remittance industry by reducing cost, intermediaries, and by increasing transparency.
It is to be noted that Ripple has created an open source, peer-to-peer, decentralized protocol, with financial institutions (RippleNet) and a number of individual technology solutions that includes payment processing (xCurrent), liquidity support (xRapid) as well as payment access (xVia).
“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,” the report stated.
“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,” the report added.
Therefore, instead of holding local currencies in accounts from around the world, banks can consolidate their liquidity into one XRP account.
They can do so by “making markets directly between banks’ domestic currencies and XRP,” thereby minimizing the number of intermediaries.
Image via Shutterstock, Royal Bank of Canada
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