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Japanese banks form consortium to consider blockchain for domestic and forex services

Japan-based financial service company SBI Holdings and its subsidiary SBI Ripple Asia Co. Ltd. have collaborated to form a consortium that will utilize blockchain technology to consider new types of payment and settlement services.

The official release stated that the consortium will be called as ‘Consortium for Considering Using Blockchain Technology to Centrally Provide Domestic and Foreign Exchange Services’. The initial members of the consortium comprise of the Bank of Yokohama, Ltd., and SBI Sumishin Net Bank, Ltd.

“While the Bank of Yokohama and SBI Sumishin Net Bank have been implementing various fintech initiatives at an accelerated pace, the Consortium will begin to consider new types of payment and settlement services that utilize blockchain technology, starting from October 2016,” the company stated.

The consortium will address on:

  • 24-hour trend of real-time settlement resulting from new changes in recent years to information and communications technology (ICT) along with behavior of customer and their way of living,
     
  • Increasingly diverse needs for remittance concerning small-value settlements, and
     
  • Borderless trend, a result of cross-border ecommerce and expansion of Japanese companies to Asian countries.

According to the announcement by Ripple, at present, the cross-border fees can run up to thousands of Yen and in the new set-up, banks pay around 90% less in fees. Use of Ripple’s technology will provide these banks’ customers with real-time domestic and cross-border payments throughout the year.

SBI Ripple Asia will serve as the secretariat of the Consortium and will create a settlement platform by March next year for centrally providing both foreign and domestic exchange services using Ripple. The release also stated that starting by the end of this month, financial institutions will be solicited to become members of the Consortium. The initial members will likely comprise of 15 banks that will increase the size to 30 banks in March 2017.

“The Consortium’s member financial institutions will continue to discuss, both from technical and operational perspectives, how to utilize Ripple and talk about the duties that domestic and foreign exchange services should fulfill,” the announcement added.

SBI Holdings in July announced that Mizuho Financial Group has become one of the first Japanese banks to pilot blockchain technology for cross-border payment settlements using Ripple.

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