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Will Banks Use XRP?

Will Banks Use XRP?

Business / Cryptocurrency & Blockchain

XRP, a cryptocurrency created by Ripple Labs, aims to foster transactions. XRP finds itself designed for both consumer applications and peer-to-peer payments. Compared to mainstream cryptocurrencies such as Bitcoin or Ethereum, XRP offers services for several special differences!

Users can use XRP to directly link their real identity with fiat accounts, which can become used for the purpose of transferring funds and cryptocurrency purchases via its platform. Unlike the mainstream cryptocurrencies, this linkage to real identity with fiat accounts is not a common feature in many other cryptocurrencies. Secondly, as XRP provides identifications for users, Ripple Labs further developed an on-chain identity verification system, following regulations from the government. Third of all, XRP offers instant transactions and zero gas fees, extremely rare compared to mainstream cryptocurrency. 

In understanding why and how XRP is used or potentially interested by banks, we must take a look at the current international transactions that banks usually make.

Processing time for international transactions is the number one concern for both banks and customers. When involved in the process of making international payments, the average process time to complete a transaction is around one to two days, extending to five days under exceptional circumstances. There are multiple reasons costing the time for transactions.

First, since it is an international payment, it is usually associated with different time zones in different countries. Since the time zone is different within each country, it indicates a difference in the processing time for the employees. More specifically, by using China and the United States as an example, international transactions will be submitted by banks in China during employee’s working hours. However, the difference in the timezone would delay the processing of the payment as it would be reviewed after employees in the United States started working, which could take usually 5 to 10 hours.

Secondly, all of the international transactions would become carefully reviewed as employees would need to identify potential fraud activities if any, which also takes time.

Thirdly, the processing time could take longer as transactions normally involve an intermediate bank to process. As a result, all of the processes added up would cost an average of one to two days of processing, and customers have to consider exceptional circumstances such as holidays. 

Thus, by considering integrating XRP into banks’ systems, it could bring benefits for both banks and customers based on the features of XRP. XRP is compliant with the ISO 20022 standard, which is a common language and model that banks or other financial institutions use for payment data transferring. In other words, it makes the process of integrating XRP into banks’ financial systems easier. At the same time, one fascinating feature of XRP is that it provides on-chain verification for users, which significantly benefits the fraud detection process taken by banks and increases the security of the transactions.

Furthermore, by easing the process of fraud detection, banks can increase their efficiency as well!

Another aspect for banks in considering XRP is the transaction costs and time associated with using XRP. As XRP guarantees free gas fees on transactions, it would significantly reduce the costs of transactions for both customers and banks themselves. Moreover, from a time perspective, as XRP provides an instant transaction, it could create a resolution for the difference in the time zone globally and significantly increase transaction efficiency. 

Despite the benefits that XRP has, people are usually concerned with the potential security-related issues. Cryptocurrency has long been judged on the high risk of losing information by hackers, and the theft of coins that diminish its value. However, the perspective is reconsidered as the new development of AI in the current world. The publication on the success of AI development can significantly contribute to reducing security risks. 

In conclusion, I think banks would consider integrating XRP into their financial system for international transactions. Not only from the benefits that banks could take under the unique features that XRP provides but also banks can apply those beneficial features to increase customer service and add more value to customers. 

Written by Qianhang Huang

Will Banks Use XRP?


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Cointelegraph. (n.d.). What is ripple: Overview, history and XRP Cryptocurrency. Cointelegraph.

Gondek, C. (n.d.). Which banks use ripple XRP and why?. OriginStamp.

Hussey, M. (2023, November 6). What is ripple (XRP)?: The beginner’s guide. Decrypt.

Inpay. (n.d.). How long do international bank transfers take?

Rodeck, D. (2023, July 13). What is XRP (ripple)?. Forbes.

Will Banks Use XRP?