In an effort to sanction Russian President Vladimir Putin for invading Ukraine, a little-known, but incredibly powerful organization known as SWIFT has entered the zeitgeist. Without it, banks around the world wouldn’t be able to do business with each other. But even before the acronym, short for the Society for Worldwide Interbank Financial Telecommunications, became widely known, competitors had emerged to try to break its monopoly on cross border transactions between banks.
Founded in 1973 and connecting more than 11,000 financial institutions around the world, the Belgian messaging service that lets banks securely arrange financial transactions is co-owned by some 3,500 financial firms globally. Last year SWIFT hosted 42 million financial messages a day. SWIFT also partners with central banks including the Bank of England, the European Central Bank and the US Federal Reserve System. Efforts to replace the inter-bank messaging platform have been mounted by crypto nerds and rogue nations alike.
Among the earliest attempts was by San Francisco-based Ripple, founded in 2012 as a digital assets company, commonly associated with the XRP cryptocurrency and valued at $15 billion. In 2016, the firm hired SWIFT board member Marcus Treacher as its global head of strategic accounts and the following year, 2017, it launched RippleNet as a messaging platform similar to SWIFT before layering on transaction settlement using digital assets in 2018. Since its inception, RippleNet has openly billed itself as a competitor to SWIFT.
While RippleNet has had difficulty holding onto its high-profile early users, RippleNet general manager Asheesh Birla says that the network has seen a record year with a run rate over $10 billion, about half of which is moving crypto products known as on-demand liquidity .
While numbers vary wildly, SWIFT conducts about $1.7 trillion worth of volume a day. Birla comes from a Silicon Valley background and views his company’s ledger offering for cross border transactions, similar to a blockchain, as less of a decentralization play and more as a market improvement.
“It took banks 20 plus years since the internet to start waking up, but they need to also modernize their technology stack to compete,” Birla says.
Taking down a global financial juggernaut has not proved easy. Ripple is currently being sued by the Securities and Exchange Commission over whether XRP is a security. While that case remains outstanding, Birla sees it’s resolution as a potential boon for RippleNet, which does not share the same renegade ethos associated with crypto startups and actually sees its potential product as even more suited for centralized actions like sanctions.
“In the case of SWIFT, a lot of countries had to really bind together to freeze assets,” he says. “If money moves in real time, like it does with these more modern payment solutions built on crypto, you can cut them off right away.”