Blockchain is moving into production, claims Ripple CEO Brad Garlinghouse after a consortium of 47 Japanese banks completed a pilot implementation of Ripple’s technology. Announced ...
Blockchain is moving into production, claims Ripple CEO Brad Garlinghouse after a consortium of 47 Japanese banks completed a pilot implementation of Ripple’s technology.
Announced yesterday by SBI Ripple Asia, a jointly-owned company between fintech firm Ripple and Japanese financial services company SBI Holdings, the successful pilot used a Ripple-powered cloud payments platform RC Cloud, to enable real-time domestic and international money transfers.
The pilot project scrutinized the blockchain-based RC cloud infrastructure during implementation, evaluating regulatory adherence, operational risks, standardization among banks and the interfaces used to connect to banks’ accounting systems.
Established in early 2016, SBI Ripple is majority owned (60%) by the SBI Group, while Ripple owns 40% of the company’s shares. SBI will see a 60% cost reduction with international remittance utilizing Ripple’s token XRP. Using Ripple’s blockchain and token, remittance will cost 8.3 bps (base points) compared to the 20.9 bps against the settlement amount via the current wire system. Remittance cost for fiat currency using Ripple’s blockchain will be reduced by a third, compared to conventional costs.
At significantly lowered costs and instantaneous transfers compared to the traditional wire transfer setup, the pilot program could prove significant in Japan. The consortium sees over a third of all Japanese banks as members and a commercial roll-out will result in the first widespread implementation of blockchain technology in a country’s commercial banking sector.
The consortium came together in November 2016, with SBI Holdings and subsidiary SBI Ripple Asia collaborating to lead the working group. Launched with 42 member banks, digital and internet-only banks joined regional financial institutions as a part of the consortium in an effort to consolidate domestic and foreign exchange services with a common platform or blockchain. Aptly, the working group was titled “The Japan Bank Consortium to Central Provide Domestic and Cross-Border Payment.”
Ripple CEO Brad Garlinghouse stated:
Consortiums are not hard to come by in this industry, but what makes this significant is that these leading Japanese banks are focused on a clear use case and moving blockchain into production. This is a concrete example that our solution is already transforming how money is sent around the world.
Ripple’s attempts to facilitate global inter-bank payments over its blockchain is further underlined in its launch of the Global Payments Steering Group. Formed in September 2016 with six founding members from banks across multiple continents including Bank of America, Santander and ANZ, the working group will look toward creating and maintaining Ripple transaction rules while formalizing standards over the Ripple blockchain.
More recently, Abu Dhabi’s largest bank launched real-time cross-border payments using the Ripple blockchain to benefit customers in the Asia-Middle East remittance corridor. Private Indian lender Axis, the third largest private bank in the country, will also begin using Ripple’s technology for cross-border payments following a successful pilot.
Image of Osaka roads from Shutterstock.