US Banks Announce Ripple Protocol Integration

American banks CBW and Cross River are to be the first to adopt Ripple's open-source distributed transaction infrastructure.

AccessTimeIconSep 24, 2014 at 12:34 p.m. UTC
Updated Sep 11, 2021 at 11:11 a.m. UTC

Ripple Labs has sealed new partnerships that will bring its Ripple protocol to two US banks.

According to the company’s 24th September announcement, Kansas-based CBW Bank and Cross River Bank, located in New Jersey, will be the first American banks to adopt Ripple's open-source distributed transaction infrastructure.

The news comes several months after Ripple inked its first deal with the banking sector, when German bank Fidor became the first institution of its kind to integrate the Ripple protocol. Like Fidor, CBW Bank and Cross River Bank will now be able to tap Ripple’s low-cost currency transfer and remittance capabilities.

According to Ripple CEO Chris Larsen, the perception that banks are fighting against open-source technologies like the Ripple or bitcoin protocols isn't accurate. Rather, he said, these institutions recognize the promise, but are naturally conservative when it comes to strategic change.

Larsen told CoinDesk:

“Obviously banks are really cautious about any new technology, regulations are very complex. But, at the same time, I think they are seeing that these technologies can solve a real problem that we have in our value exchange system, both globally and domestically.”

Enhanced banking

Many banks, especially in the United States, continue to be apprehensive about working with bitcoin companies, to the point that some startups struggle to access banking services as a result. Yet some, like CBW and Cross River, are looking at distributed transaction-settlement technologies as a way to bring their business models into the 21st century.

Gilles Gade, CEO and president of Cross River, said in a statement that its partnership with Ripple enables it to test next-generation payment infrastructures while remaining compliant with US law.

He noted:

“Our business customers expect banking to move at the speed of the Web, but with the security and confidence of the traditional financial system. Ripple will help make that a reality, enabling our customers to instantly transfer funds internationally while meeting all compliance requirements and payments rules.”

According to Larsen, banks are interested in, but not driven to adopt, the technology’s application as a currency. However, the ability to settle transactions denominated in major currencies in real time is a powerful proposition that has prompted some banks, like Cross River and CBW, to begin moving slowly but surely toward integrating systems like Ripple.

“That’s solving a real need and the banks get that,” he said.

Technology boosting operations

Banks are open to the idea of adopting frameworks such as Ripple’s because the industry recognizes it needs to move faster and more securely.

CBW chairman and chief technology officer Suresh Ramamurthi commented that the banking industry is held back by “antiquated” business practices and technology. He characterized the current banking transaction process by saying:

“Today’s banks offer the equivalent of 300-year old paper ledgers converted to an electronic form – a digital skin on an antiquated transaction process.”

He went on to say that Ripple “addresses these problems” to provide fast, compliant transactions.

Ripple CEO Larsen told CoinDesk that the process of working to onboard banks has, in a way, reshaped the company’s approach to expansion. He said that, right now, the company is in an “infrastructure building phase” which aims to improve liquidity in the Ripple system by connecting more banks around the world to the protocol.

image via Shutterstock.


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