The traditional cross-border payment systems may start to be driven out by the distributed ledger technologies as Woori bank considers commercializing of Ripple-based overseas remittances this year.
Distributed ledger technology is seen as the future of the banking sphere. It is fast, secure and transparent. At the moment the main advantage of traditional systems is the wide reach. However, the situation may change soon – the South Korean Woori bank has reported the successful testing of overseas remittance processed on the Ripple blockchain network.
Ripple is making significant steps towards the extension of cryptocurrencies usage. It steadily takes the third place among all the cryptocurrencies by market capitalization and does not seem to lean back. Nevertheless, Ripple is actively working with banks and other financial structures to strengthen the presence of the blockchain technology in the financial world. One of the significant results of this work is the collaboration of Ripple and SBI Group.
SBI Ripple Asia, which is a result of partnership between the San Francisco-based company and Japanese financial giant, is the moving force of Ripple overseas remittances. The united efforts of these companies and collaboration with a range of Japanese and South Korean banks, including Woori bank, are likely to result into the fundamental change of cross-border transactions processing.
Woori bank has successfully completed the trial of international remittances based on Ripple. The Digital Strategy Department of the bank does not regard the new model of cross-border payments as a futuristic technology – it is expected to become commercialized by the beginning of 2019.
The distributed ledger technology has a number of advantages over the existent systems. While a payment via SWIFT, which is one of the most popular international transaction systems at the moment, takes days, Ripple-based process takes moments. The pressing issue is the distribution of the system and its popularity. Still, there are some promising facts about the future of Ripple’s remittances.
A Woori official shared a remarkable fact on the new approach towards remittances: “Several banks, such as two or three megabanks and Internet professional banks, are pushing to introduce the practice.” Some of these banks can already be named. In South Korea Woori got joined by Shinhan bank. Japan has involved lots of influential financial groups, Thailand is also present in the project. All in all, the trial completed by Woori bank included 37 other financial institutions.
The most important part of the news is not the bare fact of successful testing, but the attitude of the bank towards its result. Woori bank is ready to make the progressive Ripple-based technology a part of its worldwide remittances processing.
The trust of Woori bank in the distributed ledger technology can be proved by the words of one of the bank’s officials: “The issue of overseas remittance fees is a matter for discussion, but it is much quicker and cheaper than existing remittances… In the future, the customer will choose the most advantageous overseas remittance method.”
Even though the current position of Ripple has weakened comparing to the bright start of the year, the San Francisco-based company is involved in a number of forward-looking projects. The cross-border transactions via this platform have attracted not only SBI Ripple Asia, but Western Union. The wide spread of this technology seems to be on the cards leaving the terms as the only unknown variable.