The Commonwealth Bank of Australia (CBA) will soon launch Ripple technology for its subsidiaries to transfer payments between them, said CIO David Whiteing.
Ripple is a peer-to-peer, distributed payments network that supports both cryptocurrency and fiat currency. It is built on an open source Internet protocol – Ripple Transaction Protocol.
“Bitcoin is a protocol which is now being replicated by non-asset based vendors like Ripple and others. We absolutely see that’s where it’s going to go. The bank has a role to play in that,” Whiteing said today at an AIIA event in Sydney.
“As a result, we have done a whole bunch of experiments with it. We are about to launch using Ripple as a means to transfer payments between our subsidiaries.”
The concept of a distributed public and private key is “the way of the future” when it comes to payments and money transfers, said Whiteing.
“If you look at payments protocols today, they are 40 years old, so they are very old technology that are highly susceptible to being compromised,” he added.
Whiteing said he can’t see why a bank account couldn’t be used to store loyalty coins and cryptocurrencies, shifting it from being something that just stores fiat currency to something more innovative and diverse in function.
“You have multicurrency bank accounts today with the Commonwealth Bank's app, 15 currencies available on your phone instantly in real time. It’s not that difficult for us to take that technology and make that a loyalty points store.
"It shouldn’t be that difficult for us to then add cryptocurrencies to it and whatever other means of payment transfers people might want.” .
He said 3.5 million of more 11 million of CBA customers today choose the mobile app or the website as their primary point of interface, which also makes up 46 per cent of all transactions. Whiteing expects this will continue to grow over the coming years to the point where it’ll eventually become the majority.
“In South Africa, less than 70 per cent of the population are formally banked, i.e. they have a bank account. The average salary is about $10,000 a year. Cash is used for 96 per cent of all transactions," he said, referring to CBA’s recent acquisition of South Africa-based company Tyme Capital, which deals with digital banking.
“Yet, in this economy and through Africa, with a population of about $1.2 billion in the continent, mobile inclusion is greater than 100 per cent. There are more mobile devices than there are people in the population.”
However, the underlying supporting technology needs to be simplified before throwing a bunch of payment innovation technologies on top and making things complicated, he pointed out.
“We’ve historically thought about payments as a bunch of applications; you create a payments mindset around ‘a payment is a payment, is a payment’. If I build a [single] platform, instead of having over 50 applications, I rationalise that down to about 10 or 12 and I create efficiencies around that and become much more effective," he said.
“I also create a model of continuous funding, rather than project funding, so it's this mindset of actually delivering products and outcomes, rather than projects, that is a pivot.”