Canadian bank ATB Financial has collaborated with Ripple and tech firm SAP to send the first international interbank blockchain payment to Germany’s ReiseBank.
Also read: Russia’s Central Bank to Test Blockchain Messaging System
ATB: Blockchain Success ‘Encouraging To See’
The 1,000 CAD transaction, which was completed in 20 seconds on a platform built in 9 days, represents a first in an industry where more and more players have been eyeing Blockchain’s potential.
ATB confirmed its completion on Twitter this evening:
With technology supported by SAP, ATB Financial has sent the first real international blockchain payment: https://t.co/MBFiptbUVW
— SAP News (@sapnews) July 14, 2016
“Using SAP HANA Cloud Platform, we’re able to experiment and be nimble with emerging innovations like blockchain,” ATB’s chief strategy and financial officer Curtis Strange said in a press release issued today.
The next stage for us, working with SAP and Ripple, will be to understand how the front-end experience should work for the benefit of our customers.
While the process, which used SAP’s technology acting as a mediator with the Ripple network, was a prototype as opposed to a polished product, the advantages were immediately clear. International settlements can take up two a full working week to complete using current interbank methods.
“Although we are very much still in the early stages of blockchain adoption, it was highly encouraging to see in a true demonstration the potential it has in transforming cross-border payments, making them almost instantaneous and reducing potential errors,” Strange added.
Blockchain payments have become something of a cliché for banks expressing an interest in incorporating the technology into their existing processes. From Russia to India, there has been much talk of potential, yet many institutions are still in a lengthy consultation process.
“Banks like ATB that take a positive and proactive approach to blockchain now can position themselves advantageously for when the technology enters the mainstream,” SAP executive board member Bernd Leukert said in praise of the move.
The transaction is not the first collaboration between ATB and SAP. In 2011, the company facilitated ATB’s updating of its legacy system.
According to the press release, the SAP system “has streamlined ATB Financial’s business processes and provides analytical insight so the financial institution can deliver innovative products and services through a variety of distribution channels as customers demand.”
Given the changes in business models needed to be made by banks before customers sending blockchain payments becomes standard, such a tool may still be a little way off for ATB.
In addition to being far quicker, blockchain payments cost a fraction of current transaction rates, necessitating banks to reorganize to maintain sources of income.
“One significant source of risk may be the erosion of bank revenue in payments services,” IMF deputing managing director David Lipton said on the topic in April.
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