A recent publication on Ripple Insights suggests that its tech growth could be explained by the Disruptive Innovation Theory. This approach basically implies that emerging tech is normally adopted at a smaller scale before it goes mainstream. Most notably, big players in the industry end up missing out as a result of undermining the disruptive tech potential.
According to the theory, innovative tech is integrated while still a work in progress which means a smaller market during initial stages. This, however, changes quite fast given the dynamic nature of disruptive tech in a bid to match mainstream market inefficiencies. Ripple's cross-border solutions in the payments ecosystems has since been compared to this theory in terms of growth.
Ripple's Disruptive Growth in International Payments
Ripple's payment solution, RippleNet, started off with major opposition from existing financial institutions. At the time, SWIFT dominated the market and has continued to do so but is now facing Ripple as a potential threat. Notably, Ripple pioneered its product despite the skepticism from big boys and started off with the low market.
The tech gained traction over time pulling a larger consortium owing to its friendly features and cost-effectiveness. With the introduction of on-demand liquidity based on the XRP digital asset, Ripple is now mainstream within the international payment ecosystems.
As mentioned earlier, banks had ignored the tech's value proposition in remittances as most of their business comes from corporate entities. Nonetheless, Ripple has managed to penetrate SME market as well and is optimistic of wider scale adoptions in the near future. The publication highlights that,
“In the cross-border payments industry, we are currently at an important inflection point. Established financial institutions that leverage RippleNet’s On-Demand Liquidity service today, set the stage for tomorrow’s global payment industry.”
Based on this discussion, it follows that larger financial institutions ought to change some approaches in order to capitalize on disruptive tech like Ripple. One of these changes is evaluation of new tech independently as opposed to a comparison with existing infrastructure. This is because the innovations are built to address new challenges which means old metrics are not sufficient to inform decisions.