Early Movers Will Reap Rewards from Ripple Adoption, According to New IDC Financial Insights Study
12 Aug 2015
LONDON, August 12, 2015 — A new IDC Financial Insights study builds on recent IDC analysis of the Bitcoin ecosystem by considering the potential of Ripple, an offshoot of Bitcoin which purports to be an open source, real-time payment settlement infrastructure, and the impact it could have on the financial services industry. Crucially, Ripple concentrates on providing a payments infrastructure, rather than a new currency, in its attempt to overhaul the international payments landscape.
IDC expects payments through Ripple or similar protocols to grow exponentially in the years ahead. As such protocols supersede Bitcoin, the distinction between cryptocurrencies and new payment protocols will become clearer, and the banking industry will embrace the protocols. With the support of Ripple Labs and other interested parties, Ripple is currently best placed to take this market share.
In the short term, more parties will undergo pilot and proof-of-concept projects, and domestic banks are likely to partner with counterparts overseas for this purpose. There will be an initial opportunity for banks or companies like Earthport to charge clients for the ability to make instant global payments, especially as IDC expects initially that Ripple will be adopted not as an industrywide solution like UK Faster Payments but by innovative banks.
However, the fact that the U.S. Federal Reserve is prepared to countenance a new payment network based on the principles of a distributed ledger shows the strength of the idea. The innate advantages of speed, reliability, and transparency of protocols such as Ripple will see them win out over conventional payment networks. International payments are increasingly out of step with the customer experience that consumers and businesses expect in their modern dealings, and a payment network based on distributed ledgers, such as Ripple, is a 21st century solution to this problem.
"Existing players could enhance their offerings and make them more efficient by incorporating Ripple payments, and before the technology is ubiquitous there is also the opportunity to charge customers for it. It can be expected that once there is any kind of critical mass, saturation will follow rapidly," said Lawrence Freeborn, senior research analyst, IDC Financial Insights.
"Global transaction processing infrastructure needs to evolve quickly to support growing demand for real-time payments," said Andrei Charniauski, head of Europe, IDC Financial Insights. "History tells us that the payments industry requires standards and leadership to evolve — and Ripple can offer both to lay foundations for the next-generation approach to payments. The business case is clear, so early adopters can already start offering new competitive payments products to their clients."
The study, The Ripple Effect: The New Age of Transaction Infrastructure (IDC Financial Insights #FIBA55X, August 2015), is available to purchase at www.idc.com. For more information or to arrange a one-on-one briefing with study author Lawrence Freeborn, please contact Kanupriya at +44 20898 77100 or firstname.lastname@example.org. Reports are available to qualified members of the media.
About IDC Financial Insights
IDC Financial Insights assists financial service businesses and IT leaders, as well as the suppliers that serve them, in making more effective technology decisions by providing accurate, timely, and insightful fact-based research and consulting services. Staffed by senior analysts with decades of industry experience, our global research analyzes and advises on business and technology issues facing the banking, insurance, and securities and investments industries. International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology market. IDC is a subsidiary of IDG, the world's leading technology, media, research, and events company. For more information, please visit www.idc.com/financial, email email@example.com, or call 508-620-5533. Visit the IDC Financial Insights Community at http://idc-community.com/financial.
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