ABA Banking Journal - November/December 2016 - 25


protocol is a way of connecting existing core systems-we
think that's a better approach.

Q:

How does Ripple seek to partner
with banks?

A: Banks are not looking for cool technology, they're looking
for solutions. We think Ripple should be way at the bottom
of the payments stack-so that means that partnering with
banks is essential. Banks are the core custodians of value,
so they'll be the heart of the internet of value. We're only
going to do a little bit, which is good for us as a company,
because then we can focus all of our people on what's really
changing. Banks can piggyback on that and improve their
market position.

Q:

It seems like there are a number of
different companies all working on
different blockchain solutions. How do
you see it all coming together?

A: There are going to be private blockchains that will coexist
with centralized systems, so you might see things like
that emerging. The big thing is having that interoperability
between all the existing ledgers and all the new ones
that are going to pop up for various use cases, such as
securities settlement, loans, etc. It's critical that you have
a standard for inter-operability, which we think will look
like an international ledger protocol. Without that "glue,"
those systems just become more silo networks. We don't
necessarily think a bank has to change their core system or
replicate their core system on some distributed ledger-we
don't think that's the right approach.

Q:

When you talk about developing a
global standard, how does regulation
play into it?

A: It's really important that we don't conflate the technology
with rules and risk. Rules and risk are going to be handled
in each jurisdiction by the regulators. The idea that tech
can change that gets back to the idea of disruption-this
idea that "fintech is just going to change everything." I think
when the fintech industry first came on board, that was the
pitch. It was incredibly alarming to regulators, and kind of
a setback, frankly. But I think now, regulators understand
that when we're just talking about the tech piece, it actually
solves a problem, and as long as we're talking low-level,
that's something everyone can get around.

For example, in China, you can't get to Google or
Facebook-that violates that country's rules governing
data. But IPs (the underlying technology that allows
for internet connectivity) are everywhere because the
tech is low-level enough. That's how this has to be. The
technology has to just focus on what is actually changing.
That shouldn't be rules or risk-the regulators should
maintain that.

Q:

What is the timeline for all this
interconnectivity happening?

A: I think it's happening now. I think 2016 is the year
that we've seen the commercial productions now coming
into play. My sense is that it's going to be an avalanche
effect: you're going to see a cost advantage for the banks
that create commercial products. They're going to see
new opportunities for new revenue, and at the same
time, the integrations [for other banks] will get easier and
easier. That's a good dynamic now for adoption-and I
think that has already started.

Q:

How should bank CEOs be
approaching the internet of value?

A: The really good news is that banks don't have to
worry about committing to a single application or single
provider. The big thing happening here is really the idea
of an open protocol. It's just like the emergence of the
internet. Think back to 1995, where companies might
have hired U.S. Web or another company to build their
first website. But [building the website] didn't lock them
into [that provider]-that was simply their on-ramp to
the web. And then when that company went away, or
they didn't like them or it was too expensive, there was a
whole industry there that they could turn to.

Q:

Looking 10 years into the future,
what will the international payments
landscape look like?

A: I think we really will all take for granted that we have
an internet of value, and we'll look back and think, "Wait,
you couldn't send $1 to another country?" It just won't
compute. That will be really good for banks, and really
good for growth globally.

MONICA C. MEINERT is associate editor of the ABA Banking Journal.
aba.com/BankingJournal | ABA BANKING JOURNAL

25


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Table of Contents for the Digital Edition of ABA Banking Journal - November/December 2016

Chairman’s View
Upfront
Picture This
Banking’s ‘Amazon Moment’
Special Report on Innovation and Technology
Building an ‘Internet of Value’
Do You Do What the Data Tell You?
Innovation in the Bank
Core Exercises
Cover Story Pillar of Her Community
Maintaining a Commitment to Ag Customers
Who You Gonna Call?
Anti-Money Laundering
Power Up Profile
Compliance ‘When Can I Call My Customer?’
Risk Management
ABA Compliance Center Inbox
From the States
Corporate Social Responsibility
Index of Advertisers
ABA Banking Journal - November/December 2016 - bellyband1
ABA Banking Journal - November/December 2016 - bellyband2
ABA Banking Journal - November/December 2016 - cover1
ABA Banking Journal - November/December 2016 - cover2
ABA Banking Journal - November/December 2016 - 3
ABA Banking Journal - November/December 2016 - 4
ABA Banking Journal - November/December 2016 - 5
ABA Banking Journal - November/December 2016 - 6
ABA Banking Journal - November/December 2016 - 7
ABA Banking Journal - November/December 2016 - Chairman’s View
ABA Banking Journal - November/December 2016 - 9
ABA Banking Journal - November/December 2016 - 10
ABA Banking Journal - November/December 2016 - Upfront
ABA Banking Journal - November/December 2016 - 12
ABA Banking Journal - November/December 2016 - 13
ABA Banking Journal - November/December 2016 - 14
ABA Banking Journal - November/December 2016 - 15
ABA Banking Journal - November/December 2016 - Picture This
ABA Banking Journal - November/December 2016 - 17
ABA Banking Journal - November/December 2016 - 18
ABA Banking Journal - November/December 2016 - 19
ABA Banking Journal - November/December 2016 - Special Report on Innovation and Technology
ABA Banking Journal - November/December 2016 - 21
ABA Banking Journal - November/December 2016 - 22
ABA Banking Journal - November/December 2016 - Building an ‘Internet of Value’
ABA Banking Journal - November/December 2016 - 24
ABA Banking Journal - November/December 2016 - 25
ABA Banking Journal - November/December 2016 - Do You Do What the Data Tell You?
ABA Banking Journal - November/December 2016 - 27
ABA Banking Journal - November/December 2016 - insert1
ABA Banking Journal - November/December 2016 - insert2
ABA Banking Journal - November/December 2016 - Innovation in the Bank
ABA Banking Journal - November/December 2016 - 29
ABA Banking Journal - November/December 2016 - 30
ABA Banking Journal - November/December 2016 - Core Exercises
ABA Banking Journal - November/December 2016 - Cover Story Pillar of Her Community
ABA Banking Journal - November/December 2016 - 33
ABA Banking Journal - November/December 2016 - 34
ABA Banking Journal - November/December 2016 - 35
ABA Banking Journal - November/December 2016 - 36
ABA Banking Journal - November/December 2016 - 37
ABA Banking Journal - November/December 2016 - Maintaining a Commitment to Ag Customers
ABA Banking Journal - November/December 2016 - 39
ABA Banking Journal - November/December 2016 - 40
ABA Banking Journal - November/December 2016 - Who You Gonna Call?
ABA Banking Journal - November/December 2016 - 42
ABA Banking Journal - November/December 2016 - 43
ABA Banking Journal - November/December 2016 - Anti-Money Laundering
ABA Banking Journal - November/December 2016 - 45
ABA Banking Journal - November/December 2016 - 46
ABA Banking Journal - November/December 2016 - Power Up Profile
ABA Banking Journal - November/December 2016 - 48
ABA Banking Journal - November/December 2016 - Compliance ‘When Can I Call My Customer?’
ABA Banking Journal - November/December 2016 - 50
ABA Banking Journal - November/December 2016 - Risk Management
ABA Banking Journal - November/December 2016 - ABA Compliance Center Inbox
ABA Banking Journal - November/December 2016 - 53
ABA Banking Journal - November/December 2016 - 54
ABA Banking Journal - November/December 2016 - From the States
ABA Banking Journal - November/December 2016 - 56
ABA Banking Journal - November/December 2016 - Corporate Social Responsibility
ABA Banking Journal - November/December 2016 - Index of Advertisers
ABA Banking Journal - November/December 2016 - cover3
ABA Banking Journal - November/December 2016 - cover4
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