The era of near-instant international retail bank transfers, powered by blockchain technology, is taking shape.
The first blockchain-enabled instant remittance service between Japan and Thailand is rolling out today. Launched by Thailand’s Siam Commercial Bank (SCB) in collaboration with Japan’s SBI Remit over Ripple’s blockchain, the service will help establish a new payments rail between the two countries. The Thailand-Japan remittance corridor sees approximately $250 million transferred each year, with some 40,000 Thai nationals living in Japan.
The commercial blockchain feature will enable individual funds transfers from Japanese Yen to Thai Baht between the two banks. Siam Commercial Bank claims that a transaction, once triggered, will see funds deposited in the recipient’s savings accounts in Thailand within “two to five seconds”, compared to the current ‘2-business days’ norm for payments between the two countries.
SBI Remit director Nobuo Ando underlined the need to enhance existing remittance services to make them faster and cheaper for its retail customers.
“In this case, Ripple was impressive in concept and turned out to be more so in practice,” he added. “Furthermore, we can expect to have more favorable foreign exchange opportunities as Ripple’s network expands.”
To this end, the Siam Commercial Bank – incidentally Thailand’s first bank – is also planning a rollout of the Ripple-powered blockchain service to other key remittance corridors across North America, Europe and Asia Pacific.
The aim, as stated by SCB’s strategy chief Dr. Arak Sutivong, is to “power real-time payments for our customers, whose families oftentimes depend on the availability of these funds for basic needs – time is of the essence to them.”
Ripple’s blockchain, the Ripple Consensus Ledger (RCL), has previously been used in a number of remittance pilots including an instant-money transfer between Spain and Mexico in April this year. Back in July 2016, a trial of a Ripple blockchain payment from Canada to Germany took 20 seconds whereas a separate cross-border transfer from Standard Chartered took 10 seconds in September.
Ripple notably launched an interbank blockchain group – comprising of some of the world’s biggest banks – called the ‘Global Payments Steering Group’ in September last year. The working group is tasked to create and maintain rules for the Ripple ledger. Earlier this year, Japan’s biggest bank, MUFG, joined the working group with Ripple announcing its intention to facilitate commercial global bank money transfers over its blockchain by 2018.
Today’s blockchain remittance roll-out is touted by Ripple as “the first commercially-available remittance service” powered by its blockchain.
Featured image from Shutterstock.