Cross border payments part 2: your fat margin is my opportunity 

“your fat margin is my opportunity” is a quote from a very smart entrepreneur called Jeff Bezos. Cost in cross border payments comes from 4 sources: – Fees. This is the most visible cost. – Foreign Exchange. This often exceeds the visible Fees, but has been opaque in the past; it can be as much […]

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The Complex Post-Trade world of Securities and its API transformation

Internal communication and client communication in Securities Services remains a nightmare. This sector is actually a great example of batch processing, lack of cross border interoperability and standardization. In July, BCG consulting and SWIFT published a white paper, looking at APIs in the Security Services industry. Adoption is low but awareness amongst asset managers grew […]

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Corda powered SWIFT GPI Link could be a game-changer in global trade finance

In September, SWIFT – the inter-bank messaging firm, announced the successful proof of concept (PoC) of the “GPI Link” platform in collaboration with R3. The SWIFT Global Payments Innovation (GPI) platform has previously trialled Hyperledger without much luck.  However, with R3’s growing network of corporates, the pilot seems to have gone better. The pilot also […]

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Real Time Settlement of Cross Border FX is now a 3 horse race with JPM Coin & more will join soon

Horse-racing-3.jpg

Here is the Chapter in The Blockchain Economy digital book on Real Time Settlement, updated with this post

Until recently, there were 2 horses in the race for Real Time Settlement of Cross Border FX:

  • Swift using DLT. SWIFT could do this easily at a technical level (any of the permissioned Blockchain systems will work) and as they are owned by the banks, they will get through the right doors.  This is SWIFT’s game to lose.
  • Ripple XRP. Never underestimate the ability of legacy bureaucracy to snatch defeat from the jaws of victory; so SWIFT may blow it and hand victory to a brash upstart like Ripple XRP which is publicly fighting SWIFT for banker’s attention. However, there are serious questions about a) whether a speculative coin like XRP is useful addition to a messaging system (Ripple ILP) and b) whether a speculative coin like XRP could be classified as a Security by regulators. 

Now JPM Coin is the third horse in the race that will take business away from both the other players:

  • Swift will lose volume as big banks emulate JPM and settle using their own Coin. Expect something like CitiCoin, GoldmanCoin, HSBCCoin, DeutscheCoin, etc to announce soon.  They may choose a) different branding b) different base currencies (eg EUR), but this is low hanging fruit for the Big Global Banks.
  • Ripple XRP will be forced to pitch for smaller banks (who will tend towards loyalty to SWIFT) as the Big Global Banks go for their own Coins.

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Bernard Lunn is a Fintech deal-maker, investor, entrepreneur and advisor. He is the author of The Blockchain Economy and CEO of Daily Fintech.

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