Commonwealth Bank of Australia is to begin testing technology from Ripple Labs to transfer funds between its subsidiaries.
Ripple is bidding to work with international banks to rewire the international money transfer business through the fast and frictionless exchange of its digital currency tokens in exchange for fiat currency, effectively upending traditional banking payments channels by creating a fiction-free standard for instantaneous funds transfers.
CBA's plans were revealed by CIO David Whiteing during a presentation at a forum organised by the Australian Information Industry Association. He told the audience that Commbank has been experimenting with the Ripple protocol and is "about to launch using Ripple as a means to transfer payments between our subsidiaries".
Whiteing's comments were clarified by an e-mailed statement from CBA: "Internally, Commonwealth Bank has been testing crypto protocols and we are about to begin a wider experiment with one of our offshore subsidiaries to explore the benefits of intrabank transfers using these protocols. The idea is to test in a controlled environment what a bank-to-bank internal transfer might look like using crypto rather than existing payment providers."
At the AIIA briefing, Whiteing described the move to open ledgers as the "way of the future" for the international payments industry.
“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 told the audience.
Ripple Labs recently closed a $28 million funding round that included investment from the venture arms of CME Group and global data storage company Seagate Technology. For the latter, the protocol will be adopted by its treasury arm for conducting instantaneous international money transfers.
On the banking side, Ripple has so far snared deals with two small US banks and Fidor Bank in Germany. CBA will represent its first public engagement with a Tier one bank and will be seen as a huge endorsement for the company.