Ripple Signs First Two U.S. Banks to Bitcoin-Inspired Payments Network

Ripple Labs, whose bitcoin-inspired payments network allows institutions to conduct low-cost international money transfers without the intermediation of large Wall Street banks, has signed its first two U. S. banks as customers.
The two banks – 122-year-old CBW Bank of Topeka, Kansas and Cross River Bank of Teaneck, NJ – are not national household names. Nonetheless, their embrace of the Ripple model marks a milestone for the Silicon Valley startup. And it could open the door for America’s embattled regional and community banks to recover control over a cross-border commercial banking business that was long ago ceded to bigger institutions.
Patrick Griffin, Ripple Lab’s executive vice-president of business development, said the system allows smaller banks to transfer money abroad by connecting to existing Ripple clients, such as Fidor Bank of Germany. And they can provide low-cost cross-border transfer services to other small U. S. banks.
The big benefit, he said, is that smaller banks would no longer need to deal with ‘correspondent banks’ such as J. P. Morgan & Co., HSBC Holdings, Standard & Chartered and Wells Fargo, to intermediate this business. That should also do away with the accompanying fees, foreign exchange ‘spread’ costs and, most importantly, the large collateral commitments that the bigger banks periodically demand to act as the middleman.

This post was published at Wall Street Journal on Sep 24, 2014.