Blockchain & The Future of Real-Time Payments - Prepared for - Fides Treasury ...
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Blockchain & The Future of
Real-Time Payments
Prepared for
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CONFIDENTIAL
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1. Payments Today
Agenda 2. Intro to Blockchain & DLT
3. Leveraging DLT for Payments
4. Sample Use Cases
5. Impact of Payment Friction
6. Digital Assets and IoV
7. Q&A
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Today’s Inefficient Payments Networks
DISPARATE
Different tech, systems of
record, messaging and rules
SLOW
1-3+ days to settle across
numerous intermediaries
OPAQUE
Poor data flow inhibits
information transparency
EXPENSIVE
High processing costs limit
addressable market and servicing
3
Domestic Payments are Settled Through a CCP
ACH, FPS, CHAPS, etc.
Originating Beneficiary
Ledger
Bank Bank
There is no Universally Accepted CCP for Int’l Payments
This makes international payments difficult
Originating Beneficiary
Ledger Ledger
Bank Bank
(USD) (EUR)
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There is no Universally Accepted CCP for Int’l Payments
This makes international payments difficult
Originating Beneficiary
Ledger Ledger
Bank Bank
(USD) (EUR)
$ €
$ € €
Originator Originating Originating Beneficiary Beneficiary
Bank Bank Bank
Originator Beneficiary
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UJF44A2S75UC2 5Sample Cross-Border Payment Today
Limited Visibility and Uncertainty Result in Poor Client Experience
Payment instructions Payment notification / Statement Reporting
Originator Originator’s bank Correspondent bank Beneficiary’s bank Beneficiary
No/Limited Fee Disclosure Uncertain timing Settlement Risk Low Visibility on Status Limited Payment Details
6What Is a
Blockchain?
7All Blockchain Use Cases Stem From Payments
Lending
Securities Smart Contracts
Trade Finance Insurance
PAYMENTS
8What Banks Do Not Like About Blockchain
● Scalability (blockchain has a global
transaction limitations)
● Transaction Privacy (public/shared
ledger)
● Interoperability (blockchain requires
everyone to use a single ledger)
Interledger Protocol
● Usage of Digital Assets for
Addresses
Transactions
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UJF44A2S75UC2 9Leveraging DLT for Cross-Border Payments
Enabling Real-time Settlement with Bi-Directional Messaging
Originator Originator’s bank Correspondent bank Beneficiary’s bank Beneficiary
Payment FX, Fees &
instructions Time Disclosed
Quote Validation &
Accepted Compliance
Payment Atomic
Submitted Settlement
Payment
Status
Details
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MKFEX6ANMB7U 10Sample Use Cases
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MKFEX6ANMB7U 11Use Case 1: Spot Funding Operations
Traditional “Bulk” Funding Process
₹
Bulk funding operations
on a monthly or
quarterly basis results in
idle cash.
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MKFEX6ANMB7U 12Use Case 1: Spot Funding Operations
Real-Time, Cross-Border Payments Enables a Shift to Spot Funding
₹
Spot funding reduces
idle cash, FX risk and
counterparty exposure
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MKFEX6ANMB7U 13Sweden | United States
Corporate Payments
SEB, a Scandinavian bank, has pursued a
corporate payments use case with Ripple on
behalf of one of its corporate customers from
Sweden to the US. As of Q12018, SEB has
processed over $1B in volume over Ripple.
With Ripple, SEB has been able to reduce the
time to settle from hours to seconds.
PROPRIETARY AND CONFIDENTIAL; Contents are proprietary to Ripple and provided on the condition of confidentiality. Provided information may be disclosed,
reproduced and used only in accordance with a written agreement with Ripple. No implied licenses are intended and all rights are reserved. CONFIDENTIALUse Case 2: Vendor Payments
Common Practice - Bidding in Buyer Functional Currency
Many corporates will
require international
Supplier $ Wire vendors to bid only in
Quotes ($)
their functional currency,
pushing FX costs to
suppliers.
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MKFEX6ANMB7U 15Use Case 2: Vendor Payments
Recommended Process - Supporting Local Currency Pricing
Supporting bidding in
Supplier ₹ multiple currencies can
Quotes
result in lower supplier
costs.
Bids compared
on parity basis
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MKFEX6ANMB7U 16AMEX | Ripple AMEX is building their SME and corporate customers’ supplier payments on RippleNet, creating a global network or clearing partners around the globe. This SME-tailored service is targeted to improve servicing and drive customer acquisition. By using Ripple, AMEX speeds the time to market, lowers their cost and delivers a better customer experience.
AMEX | Ripple
AMEX is building their SME and corporate
customers’ supplier payments on RippleNet,
creating a global network of clearing partners
around the globe.
This SME-tailored service is targeted to create a
differentiated service and drive customer
acquisition. By using Ripple, AMEX speeds the
time to market, lowers their cost and delivers a
better customer experience.
18Standard APIs
Many customers join RippleNet to create
new payment corridors that help them Payment
Provider
improve their customer experience by
reducing the cost, or improving on the
customer experience.
This is done with the goal of driving new
revenue.
19Creating a Connectivity Standard
Payment Provider Bank
Bank Bank
Payment
Provider
Corporate Payment Provider
20Operational Impact
of Cross-Border
Payment Friction
Reconciliation
Idle Cash
Supplier Terms
Shipping Delays
Payments Fraud
Red Tape
Forecasting
Excess Fees
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MKFEX6ANMB7U 21Digital Assets and The IoV
O U R V I S I O N
The Internet of Value:
Enable the world to move money
like information moves today.
23Global Payment Demand on the Rise as Global Banking
Reach Decreases
225
26
25
22
Correspondent 19
18
176 Global
Banking E-Commerce
145
Relationships 14
13
Sales
in thousands 12 12 in billions
113
55
2 8
.25 .5
2002 2003 2005 2007 2010 2012 2013 2014 2015
241. Convert fiat to 2. Transfer 3. Convert
digital asset digital asset back to fiat
$ ¥
Digital assets eliminate
the need for nostro
accounts or pre-funding
foreign accounts
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MKFEX6ANMB7U 25Sample Digital Asset Payment Using XRP
Payment xRapid Payment
Originator service Beneficiary
0. Quote estimate for 2. Exchange USD for XRP 4. XRP settled across 5. Exchange XRP 6. Initiate local rail
USD->MXN payment 3. Withdraw XRP XRP Ledger for MXN payout in MXN
1. Instructions for USD- to receiving exchange
>MXN payment
XRP exposure time = ~6 seconds
Total Transaction time = ~2 minutes
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INTERNAL
CONFIDENTIAL
UJF44A2S75UC2 26Digital Asset Super Highway The Current State and Path to Broader Adoption
28
Q&A
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