Distributed ledger technology firm R3 and 12 of its consortium banks are trialling Ripple's native digital asset, XRP, for interbank cross-border payments.

The member banks trialling the technology are Barclays, BMO Financial Group, CIBC, Intesa Sanpaolo, Macquarie Group, National Australia Bank (NAB), Natixis, Nordea, Royal Bank of Canada (RBC), Santander, Scotiabank, and Westpac.

Use of XRP can help banks support real-time value exchange rather than depending on nostro accounts to hold multiple currencies across the globe, offering on-demand liquidity and lowering associated costs, Ripple said in a statement.

R3 CEO David Rutter said: “The tradition of holding numerous currencies across multiple accounts in different countries is costly and inefficient.

“This is a legacy issue from a time when the technology did not exist to offer a viable alternative; however, digital assets and distributed ledgers can now enable real-time exchange of currencies between parties anywhere in the world without the need for a third-party intermediary. This prototype paves the way for a major overhaul of how banks process and settle cross border payments.”

XRP has the fastest settlement speed, allowing settlement in about five seconds or less. Ripple said that use of XRP can help banks save up to 60% in payment processing costs apart from liquidity efficiencies and nostro consolidation benefits.

BMO Bank of Montreal head of Canadian commercial banking and partnerships said: “This technology will be a catalyst in reducing complexity, streamlining processes and ultimately lowering the significant costs associated with interbank cross-border payments, which will benefit both banks and their customers in the years ahead.”