NEW YORK: A division of PNC Financial Services Group Inc will use technology built by startup Ripple to process international payments, the companies said on Wednesday, a possible precursor to the use of blockchain in mainstream finance.
PNC Treasury Management will use xCurrent, a system developed by Ripple, to speed up the way its U.S. business clients get paid invoices by overseas buyers, Ripple said.
Over the past few years banks have been ramping up their investments in distributed ledgers, an umbrella under which so-called blockchains fall, in the hopes that it can help them streamline some of the most cumbersome processes. Despite the fanfare, few blockchain systems have been deployed so-far.
Distributed ledgers are databases maintained by a network of computers rather than a centralized authority.
Several banks have tested or deployed xCurrent, which uses "bi-directional messaging" that can eventually plug them into distributed ledgers, but that "is not a distributed ledger" itself, Ripple's Chief Technology Officer David Schwartz told Reuters in June. He added banks were unlikely to use distributed ledgers for payments for now.
Ripple is among the most well known startups that builds blockchain technology, or the software that first emerged as the system underpinning cryptocurrencies.
Ripple also champions the use of a cryptocurrency called XRP, of which it holds a large share, and which it hopes will be used by financial firms for payments in conjunction with its payment platform xRapid.
PNC Bank will not be using XRP or xRapid to carry out payments for now, Asheesh Birla, Ripple's senior vice president for product management, said in an interview.
"Banks aren't going to be the first adopters of xRapid," Birla said. He added xRapid was more targeted towards emerging markets than the United States.
XCurrent uses an immutable "interledger" protocol which Ripple said improves on existing payment networks because it offers instant settlement.
Getting banks to use xCurrent is a first step towards adoption of its other product, Birla said.
"It's a way to get their toe into the water," Birla said. He added that the next step would be "how do you get them to use xRapid which is our liquidity product."
(Reporting by Anna Irrera, Editing by Rosalba O'Brien)