In mid-March, IBM launched its World Wire global payment tool. Built on the Stellar network, World Wire is a blockchain-based payment service designed to allow participating banks to carry out money transfers and settlements internationally. The service enters a market where competing products from major players such as Ripple and JP Morgan have already gained traction—not to mention more decentralized blockchain options such as Bitcoin. What does IBM World Wire have to offer that’s not already provided by the existing blockchain-based options?
World Wire enters a scene where Ripple and JP Morgan Chase’s JPM Coin have already made serious inroads. As of January 2019, startup Ripple had already entered into more than 200 partnerships with major financial institutions to provide cross-border payment services. On the other hand, JPM Coin—backed by one of the most powerful names in the industry—also beat IBM to the market.
Moreover, there are barriers to success that affect all three companies equally. Elizabeth White of The White Company, a cryptocurrency solutions firm, points out what she sees as World Wire’s biggest obstacle: the nature of its intended clients. “The biggest barrier for something like World Wire to get off the ground is the traditional banking system and its resistance to innovation,” said White. “Large intentional banks have been using systems like SWIFT for decades and have whole ‘wire departments’ dedicated to processing transactions. While blockchain would significantly modernize, automate, secure and speed up the whole process, it would require retraining and reworking a bank's entire operations to implement.”
Still, World Wire could be the answer to many of the problems that have plagued the cryptocurrency space. The very characteristics that made cryptocurrency so attractive also made it a haven for fraudster and led to a call for a more regulated and controlled approach to blockchain.
In the end, widespread acceptance and use of World Wire over established systems like SWIFT may come down to education and understanding of blockchain’s potential. As White points out, “there is also some apprehension amongst many banking professionals about using ‘blockchain’ because sadly there are quite a few that still don't understand the technology and may even associate blockchain with money laundering, completely missing the significant anti-fraud prevention advantages of distributed ledger.” Overcoming these barriers may be the key to IBM’s success with its World Wire product.