Working with a team at ATB Financial, SAP and Ripple designed and built a proof-of-concept prototype based on blockchain technology. The prototype was used to send a test CAD $1,000 payment from ATB Financial to ReiseBank. According to the SAP press release, the payment, which would typically have taken between two to six business days to process because of requirements such as settling with the counterparty bank and reconciling accounts, was completed in around 20 seconds.
Using blockchain technology for efficient, fast and cheap cross-border payments is nothing new. What is interesting here is the involvement of SAP. With 78,000 employees, 310,000 corporate customers worldwide and a 2015 annual revenue of €20.8 billion, the company is the world’s third largest independent software manufacturer based on market capitalization. SAP has long been considered the embodiment of German quality and solid, no-nonsense enterprise computing for large firms.
“ATB stepped up as a relatively early adopter of digital in the banking world,” Kris Hansen, senior principal, industry value engineering - financial services, SAP Canada, told Bitcoin Magazine. “By 2011 the bank had already moved from legacy systems to a digital core. This paved the way for a level of speed and innovation less forward-thinking banks could only dream of. The blockchain demo is the latest example of how that early investment is paying off, and how ATB is prepared for a future led by digital forces. It’s also evidence of what digitally-ready banks and fintechs can do if they team up.”
The technology prototype connects SAP HANA Cloud, the open platform as a service from SAP, and the SAP Payment Engine application, which centralizes payment processing in one solution, with Ripple’s network. For the demonstration, SAP provided a mobile user interface through which the payment was executed.
Ripple’s distributed financial technology allows for banks around the world to directly transact with each other without the need for a central counterparty or correspondent. Ripple’s solution is built around a decentralized network that offers a cryptographically secure end-to-end payment flow with instant transaction verification. According to the company, 12 of the top 50 banks are working with Ripple.
ATB Financial is the largest Alberta-based financial institution, with assets of $46.8 billion. In 2011, the bank migrated its entire legacy banking system to a major new core system built using SAP solutions, making it one of the largest SAP deployments in North American banking.
“Although we are very much still in the early stages of blockchain adoption, it was highly encouraging to see in a true demonstration the potential it has in transforming cross-border payments, making them almost instantaneous and reducing potential errors,” said Curtis Stange, chief strategy and operations officer, ATB Financial. “Using SAP HANA Cloud Platform, we’re able to experiment and be nimble with emerging innovations like blockchain. The next stage for us, working with SAP and Ripple, will be to understand how the front-end experience should work for the benefit of our customers.”
A recent company communication reveals that SAP is working with multiple customers to explore how blockchain technology can support numerous processes, including shared ledger payments and trading capabilities. The company is looking at concepts, technologies, existing implementations, partnerships and future product integrations that will allow SAP to help its customers understand the role that blockchain could play in their business.
“While Bitcoin may have been a flash-in-the-pan technology, it has given the financial world a new way to look at its architecture and systems with blockchain,” said Raimund Gross, solution architect and futurist at SAP. “As this space evolves throughout the next few years and more banks integrate blockchain into their overarching operations, one thing is certain ‒ the possibilities are endless.”
However, according to Gross, technologists need to translate the blockchain technology concept into specific business value messages spelling out the advantages and benefits for departments by process and by industry.
“Banks like ATB that take a positive and proactive approach to blockchain now can position themselves advantageously for when the technology enters the mainstream,” concluded Bernd Leukert, member of the SAP Executive Board. “ATB’s blockchain transaction underscores the value of running a business on a full-fledged digital core so it can react quickly to emerging possibilities and avoid the threat of disruption.”