(Bloomberg) -- Ripple, which aims to make it easier to send payments around the world, raised $55 million in second-round venture funding and added Standard Chartered Plc, Bank of Montreal and Mizuho Financial Group Inc. to its network of banks.
San Francisco-based Ripple has an enormous target in its sights: the $155 trillion that each year moves between countries in the cross-border payments industry. Ripple’s aim is to connect the various blockchains being developed by Wall Street firms, enabling corporations and banks to shift money around in minutes rather than the days or weeks it can now take.
Industries from finance to health care to utilities are working with blockchains such as the one powered by ethereum, with the goal of radically changing how payments are tracked, securities and derivatives trades are processed, and health records are stored, to name just a few of the potential uses. Ripple refers to this as the “internet of value” where money travels as far and as fast as information moves on the internet.
“2016 has proven to be the year where the most forward-thinking financial institutions are actually using blockchain technologies for payments and settlement rather than as an experiment,” Chris Larsen, Ripple’s chief executive officer, said in a statement.
In an interview, he said his company’s technology lets banks link the ledgers they keep to track where payments are going. “We believe that will be the wiring for the internet of value,” he said.
Besides Japan’s Mizuho, Ripple added two other Asian banks to its network: Siam Commercial Bank Pcl of Thailand and Shanghai Huarui Bank of China.
“We’re particularly excited about what’s going on in Asia,” Larsen said in the interview.
The other new firms are Sydney-based Westpac Banking Corp. and Melbourne-based National Australia Bank Ltd. They joined existing members Banco Santander SA, UniCredit SpA, UBS Group AG, ReiseBank AG, Canadian Imperial Bank of Commerce, National Bank of Abu Dhabi PJSC, ATB Financial, Fidor Bank AG, Cross River Bank and CBW Bank.
Ripple raised the $55 million from firms including Standard Chartered, Accenture Ventures and SCB Digital Ventures, the venture arm of Siam Commercial Bank, the company said. Prior investors Santander Innoventures and the investment unit of CME Group Inc. also put in more money, Ripple said. It raised $28 million last year.
Ripple offers two other ways for firms to move money internationally besides its so-called interledger protocol. Ripple Connect allows banks to license the firm’s technology to connect any two banks in the network so that money can move instantly at much less cost than in today’s correspondent banking system, Larsen said.
The third way involves using Ripple’s proprietary digital currency XRP. Here the company uses market makers who change dollars into XRP, then change that XRP into Japanese yen for a money transfer from San Francisco to Tokyo, for example. This option is best suited for smaller firms that don’t have currency market-makers of their own, Larsen said.
“We saw for a time that digital currencies were radioactive to banks, but that’s not the case anymore,” he said.
In a sign of how young the blockchain world is at the moment, even the terms can cause confusion. In August, Ripple’s Chief Technology Officer Stefan Thomas published an essay titled “The Subtle Tyranny of the Blockchain” in which he said “blockchains are a pain to work with” because they require agreement on changes before the validity of those changes has been proven, among other issues.
Larsen acknowledged the seeming confusion in this argument considering Ripple still uses the term blockchain to advertise its work.
“Blockchain has become one of those overloaded terms,” he said. It can mean bitcoin or distributed ledgers or, more broadly, the entire category of financial firms working in this area, he said.
“As a company we often define ourselves in the blockchain space because it’s what defines our industry, but technically it’s not accurate,” he said. He prefers the term “distributed financial technology.”
“That’s the big move that’s happening,” he said.