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Cross-border payment innovation for the caribbean
- 1. IBIS Management Associates© 2016IBIS Management Associates © 2016 IBIS Management Associates Inc. Clark Russel, CEO Miami 16 April, 2016 THE NEW THINKING IN CROSS BORDER PAYMENTS FOR CARIBBEAN BANKS
- 2. IBIS Management Associates© 2016 Topics • Quick refresh on IBIS Management Associates Inc. • Alchemy and Operational Excellence • The Ripple network and unique opportunity for cross border payments • A Caribbean roadmap to a Ripple connect pilot • Q & A
- 3. IBIS Management Associates© 2016 A trusted advisor to Central and Commercial Banks, Credit Unions & other FI's and developers of best in class banking technology solutions for Operational Excellence. • Every month, billions of dollars flow securely through our proprietary systems • Proven solutions. Clients in more than 40 countries • Offices in Curacao, Miami and Singapore • We help financial institutions to become Profitably Efficient • Experts in Operational Excellence, Payment Processing, SWIFT and Regulatory Compliance • In-house Development team • State-of-the-art Online Banking: Internet Banking & Mobile Banking • Back office efficiency gains improve by 600% • More than double the profitability of your operations in under three months A QUICK REFRESH ABOUT IBIS MANAGEMENT
- 4. IBIS Management Associates© 2016 Award-winning solutions for: Cross Border Payment Processing SWIFT Connectivity Mobile & Internet Banking Regulatory Compliance and Reporting
- 5. IBIS Management Associates© 2016 SERVING CARIBBEAN BANKS
- 6. IBIS Management Associates© 2016 Client Footprint
- 7. IBIS Management Associates© 2016 Customer payment Order CSR Online Banking Mobile Banking INPUT OUTPUT RTGS Alchemy Enter Verify Authorize CORE Banking Realtime Sanction List Screening ACH TRADITIONAL SETUP
- 8. IBIS Management Associates© 2016 STP for all Channels Automates all Payment processes • Improved Efficiency & Compliance • More Control & Audit ability • Reduced operational costs & risk • Increased Profitability • Standardization across channels • Channel and procurement flexibility
- 9. IBIS Management Associates© 2016 CONTINUOUS DRIVERS OF CHANGE Profitability Costs & Complexities need to be reduced for more profitable banking business (Manual processes, multiple systems) Payment Services Are facing the highest level of disruption Customer Expectations are creating a need for speed and innovation De-risking Cross-border $$ payment in jeopardy as US Correspondent banks are placing increased pressure on Caribbean banks
- 10. PROPRIETARY AND CONFIDENTIAL;Contents are proprietary to Ripple Labs and provided on the condition of confidentiality. Provided information may be disclosed, reproduced and used only in accordance with a written agreement with Ripple Labs. No implied licenses are intended and all rights are reserved. CONFIDEN TIAL Global Leader in Distributed Financial Technology
- 11. PROPRIETARY AND CONFIDENTIAL;Contents are proprietary to Ripple and provided on the condition of confidentiality. Provided information may be disclosed, reproduced and used only in accordance with a written agreement with Ripple. No implied licenses are intended and all rights are reserved. CONFIDEN TIAL Experience Capital Markets • J.P. Morgan • Citi • Merrill Lynch • BlackRock • Visa • Fiserv • Paypal • Prosper Technology • Google • Apple • NSA • Yahoo • Bloomberg • NASA Team 120Team Members • 65% Engineering Talent • San Francisco • New York • Sydney • London Financial Technology Company With expertise in global financial settlement Regulation • Federal Reserve • SEC • DTCC
- 12. The Problem WithToday's Payments Infrastructure 12
- 13. ¥ Central counterparty ¥ $ ¥ Lifting fees Receiving correspondent Sending bank (USA) Receiving bank (Japan) Central counterparty $ FXcost: $$$ Sending correspondent / Liquidity provider Lifting fees Duration: 2–5 days $ Problems: Access, Certainty, Speed, Cost Decades Old Infrastructure
- 14. IBIS Management Associates© 2016 Direct global reach is costly Costs associated with nostro accounts: liquidity, regulations, operations, risk and compliance
- 15. PROPRIETARY AND CONFIDENTIAL;Contents are proprietary to Ripple and provided on the condition of confidentiality. Provided information may be disclosed, reproduced and used only in accordance with a written agreement with Ripple. No implied licenses are intended and all rights are reserved. CONFIDEN TIAL Corridors without a direct reach are inefficient Sending Bank Receiving Bank Sending Correspondent Receiving Correspondent Lower payment volume do not justify a direct nostro relationship KEY PROBLEMS: ! Delays: Relay process induces delays in payment settlement ! Risk: Multiple intermediaries increase settlement risk, with little traceability ! Unknown Liquidity Route: The receiving correspondent is usually unknown ? Payment failure Unknown Party
- 16. ~4% of wires fail 2+ daysto settle $1.6 T in costs The Real Impact of the Problem
- 17. Make money movelike information moves on the web today. Ripple Vision...
- 18. IBIS Management Associates© 2016 Make Institutions Interoperable
- 19. IBIS Management Associates© 2016 Efficient global reach without nostro relationships in every corridor Consolidation of nostro relationships
- 20. IBIS Management Associates© 2016 What is Ripple? Distributed transaction and ledger technology that allows banks to directly transact with other banks to settle transactions in real time.
- 21. IBIS Management Associates© 2016 Ripple Consists of 3 Main Components Ripple Connect: Connects banks to the Ripple network to exchange KYC risk information, fees, payment details and expected time of funds delivery.
- 22. IBIS Management Associates© 2016 Ripple Consists of 3 Main Components Ripple Stream: Is an interface for liquidity providers (I.e. the bank’s FX desk) to submit bid/ask offers to the Ripple network.
- 23. IBIS Management Associates© 2016 Ripple Consists of 3 Main Components . The Ripple Network: Contains the Ripple Consensus Ledger (RCL), the secure distributed ledger that uses the consensus process to settle transactions.
- 24. PROPRIETARY AND CONFIDENTIAL;Contents are proprietary to Ripple and provided on the condition of confidentiality. Provided information may be disclosed, reproduced and used only in accordance with a written agreement with Ripple. No implied licenses are intended and all rights are reserved. CONFIDEN TIAL Capability 1: Real-time, Atomic Settlement Sending bank Receiving bankSending Correspondent Receiving Correspondent Single-step atomic transaction Step 1: Payment Information Exchange and Processing Step 2: Cryptographic Escrow of Funds Step 3: Atomic Settlement Step 4: Payment Confirmation
- 25. PROPRIETARY AND CONFIDENTIAL;Contents are proprietary to Ripple Labs and provided on the condition of confidentiality. Provided information may be disclosed, reproduced and used only in accordance with a written agreement with Ripple Labs. No implied licenses are intended and all rights are reserved. CONFIDEN TIAL Real-time, atomic multi-hop transactions 25 Ability to chain transactions together without impacting service levels KEY BENEFITS: ! Reduced Delays: Payment processing across all intermediaries happens in parallel ! No Settlement Risk: Either the entire payment goes through or it fails (atomic payment) ! Higher Balance Sheet Efficiency: Ability to consolidate nostro relationships while maintaining service levels Sending Bank Receiving Bank Sending Correspondent Receiving Correspondent
- 26. PROPRIETARY AND CONFIDENTIAL;Contents are proprietary to Ripple and provided on the condition of confidentiality. Provided information may be disclosed, reproduced and used only in accordance with a written agreement with Ripple. No implied licenses are intended and all rights are reserved. CONFIDEN TIAL Ripple Connect Ripple Connect Ripple Network (Interledger Protocol - ILP) Bank Bank Payment Instructions (with structured data) Customer Information (AML/KYC) Fee Exchange Automated Payment Confirmation Settlement Settlement Capability 2: Bidirectional Messaging
- 27. PROPRIETARY AND CONFIDENTIAL;Contents are proprietary to Ripple Labs and provided on the condition of confidentiality. Provided information may be disclosed, reproduced and used only in accordance with a written agreement with Ripple Labs. No implied licenses are intended and all rights are reserved. CONFIDEN TIAL 27 Sending Bank Receiving Bank Bidirectional messaging increases operational efficiency and lower costs KEY BENEFITS: ! Higher STP: Data validation prior to transaction ! Transparency: Capability to pre-disclose end-to-end delivery fees (Basel III and Dodd-Frank) ! Intraday liquidity monitoring and automated reconciliation: Real-time payment confirmation More efficient bank-to-bank settlement
- 28. PROPRIETARY AND CONFIDENTIAL;Contents are proprietary to Ripple and provided on the condition of confidentiality. Provided information may be disclosed, reproduced and used only in accordance with a written agreement with Ripple. No implied licenses are intended and all rights are reserved. CONFIDEN TIAL Capability 3: Liquidity Management Model 1 (Same as today): SVB (USD) Correspondent (USD) Correspondent (EUR) DB (EUR) SVB Nostro DB Nostro SVB (USD) DB (EUR) Liquidity Provider 1 Liquidity Provider 2 Liquidity Provider 3 USD EUR EUR EUR EUR USD USD USD Model 2 (Competitive liquidity marketplace):
- 29. PROPRIETARY AND CONFIDENTIAL;Contents are proprietary to Ripple Labs and provided on the condition of confidentiality. Provided information may be disclosed, reproduced and used only in accordance with a written agreement with Ripple Labs. No implied licenses are intended and all rights are reserved. CONFIDEN TIAL Flexible Liquidity Provisioning 29 Multiple models for liquidity provisioning for banks KEY BENEFITS: ! Balance Sheet Efficiency: Ability to leverage third party liquidity for non-core corridors ! Agility: Expansion into new corridors without incurring capital risk or cost Sending Bank Receiving Bank
- 30. IBIS Management Associates© 2016 KYC & Compliance Using Ripple does not impact an institution’s Compliance, AML, Sanctions list screening, and transaction monitoring requirements and responsibilities. Ripple is designed to complement existing compliance programs
- 31. IBIS Management Associates© 2016 & Partnership Solution
- 32. IBIS Management Associates© 2016 Online Banking Wire Transfer Alchemy Entry Verify Auth. CORE Banking STP Sanction List Screening Ripple Connect example through Alchemy... Ripple Connect
- 33. IBIS Management Associates© 2016 Access: Provides direct access to a growing, global network of financial institutions and liquidity providers instead of relying on scarce correspondent banking relationships for cross-currency settlement. Certainty: Ripple’s technology tightly integrates payments messaging with funds settlement, allowing for unprecedented visibility into a transaction’s lifecycle. Speed: Ripple’s distributed technology enables banks to settle cross-border payments in real time allowing them to serve their customers in new ways with differentiated services. Cost: Through Ripple, banks can lower their cost of cross-currency settlement by minimizing settlement risk and operational costs. Key Benefits of using Alchemy - Ripple
- 34. IBIS Management Associates© 2016 Next to ALL existing Alchemy benefits: Key Benefits of using Alchemy - Ripple • Improved Efficiency & Compliance • More Control & Audit ability • Reduced operational costs & risk • Increased Profitability • Standardization across channels • Channel and procurement flexibility &
- 35. IBIS Management Associates© 2016IBIS Management Associates © 2016 Thank You! For more information please contact: clark.russel@ibis-management.com germaine.gibbs@ibis-management.com