In an era where time is money, the race to expedite cross-border payments is intensifying.
The transformation of cross-border payments is made possible by companies such as Ripple, a provider of enterprise blockchain solutions for financial institutions. It recently secured its full Major Payments Institution licence from the Monetary Authority of Singapore, enabling the company to continue providing regulated digital payment token services in Singapore.
“By harnessing the power of blockchain technology, real-time cross-border settlement will soon become the norm. This will help businesses reduce overheads and eliminate the need for pre-funding in destination accounts,” said Mr Brooks Entwistle, senior vice president and managing director of Ripple.
The result? A faster, more cost-effective and transparent cross-border payment ecosystem that has wide-reaching implications for businesses and their customers.
CATALYSING FINANCIAL EFFICIENCY GLOBALLY
The rise of blockchain, coupled with real-world use cases and declining global cash usage, has spurred the research and development of central bank digital currencies (CBDCs).
These digital assets and other blockchain solutions are poised to reshape the global banking system, said Mr Entwistle. According to Ripple’s New Value Report 2023, over 90 per cent of global financial leaders believed that digital assets like CBDCs will have a significant or massive impact on business, finance and society in the next three years.
To expedite this shift, Ripple has built a global payments network, RippleNet, which has already processed millions of transactions worth billions of dollars globally. Ripple is also working with financial institutions to tackle inefficiencies within the US$130 trillion (S$178 trillion) cross-border payments market.
“Legacy systems still dominate cross-border payments, often requiring days for settlements,” pointed out Mr Entwistle. “In contrast, blockchain and digital asset technologies provide a global infrastructure that enables instantaneous transactions, reduced fees and 360-degree visibility.”
LEVERAGING BLOCKCHAIN FOR COST-EFFECTIVE GLOBAL BANKING
Mr Entwistle believes that blockchain technology holds the key to the creation of a robust global banking system, one that has the potential to deliver US$10 billion in cost savings by 2030. These savings can serve as a counterbalance to the challenges posed by rising interest rates, in turn attracting new business.
“Modern payments technology can also release capital that would otherwise be tied up in pre-funded accounts, alleviating liquidity constraints arising from costly credit,” said Mr Entwistle. “Moreover, streamlined international transactions can help maintain or establish payment flows to and from emerging markets. Such flows might otherwise be restricted if banks, responding to the surge in interest rates, decided to curtail their investments and growth.”
Learn more about the future of finance at the Singapore FinTech Festival from Nov 15 to 17, 2023.
