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Fintechs are seeking to undermine SWIFT's lock on the payments industry with cheaper, faster technology. The upstarts are pairing up with banks and other heavyweights.

Global payments messaging network SWIFT is under threat from a slew of fintechs seeking to offer similar services at a far cheaper price based on blockchain technology (click here to read the first installment of this story). Besides slashing costs, fintech networks are offering cross-border payment solutions working at higher speeds than SWIFT can.

The upshot? The 40-year-old Brussels giant is in trouble: Based on initial tests, Ripple said that its liquidity solution and digital asset allowed a cross-border payment to take place in just over two minutes, compared to today’s average of two to three days. The leg of the transfer that touches the XRP ledger takes less than five seconds, but there are additional processing time for the transfer moving across the intermediary digital asset exchanges and local payment rails.

The competition comes as banks themselves try to develop their own utility settlement coins, or USCs, backed by central banks. Last year, six firms – Barclays, Credit Suisse, Canadian Imperial Bank of Commerce, HSBC, MUFG and State Street – joined an effort led by UBS to create a digital cash system that would allow financial markets to make payments and settle transactions quickly via blockchain technology.

As the USC does not require manual processing, nor authentication through intermediaries, payments can be made faster, more reliable, and easier to audit. 

Startups Win Over Banks 

Beyond the technological advances, both Ripple and Stellar have won impressive partners in both technology and financial circles – including banks. Major firms such as Standard Chartered and Santander invested in Ripple's huge funding round in 2016, based on data from «Crunch Base». Ripple had ten funding rounds and raised close to $96.3 million so far.