Ripple, the blockchain company is looking to take on the world of banking and has special plans for Japan on its radar. Some of Japan’s biggest companies seem to have a pro-blockchain attitude, which is unsurprising due to the open attitude in the country regarding blockchain and cryptocurrencies.
Some of these companies include mammoth investor group SBI Holdings, and Mitsubishi UFJ Financial Group, one of the biggest financial services institutions in Japan.
Why Japan Needs A Banking Revolution
The country is in dire need of a revolution in the banking system, facing a multitude of problems ahead of a debilitating crash in the late 90s. Owing to the Asian financial crisis, an already dwindling economy saw banks bear the brunt of it.
Even as the county’s banking system has not recovered, business moves on as usual in the country. Bigger players like Mizuho bank and MUFG have seen their business disappear to smaller, newer and faster players.
Moreover, the banking system in the country is outdated, as citizens can only work on weekdays. This system is being disrupted by mobile wallets such as Alipay, which are much more accessible and easier to use than banking services provided by conglomerated today.
This has led to industry leaders coming together to fix the issue that has been plaguing banking systems. This is where SBI Holdings has laid out a master plan.
SBI’s Orchestrations In The Larger Scheme
SBI Holdings is one of Japan’s biggest conglomerates, with specializations in financial services and asset management along with businesses related to Biotechnology. In their financial services vertical, they offer products for foreign exchange, securities and a cryptocurrency exchange.
This is an interesting set of financial services to offer, especially considering that the company wishes to achieve what they call ‘synergy’ between their products. The company wished to increase overall liquidity in their market portfolio, leading to the creation of the liquidity market, which caused a synergy between their forex and securities market.
Now, SBI aims to bring the cryptocurrency exchange into the fold to increasing overall market liquidity. The platform has 4 of the biggest cryptocurrencies in the world, and seeks to create an environment for large institutional investors to buy and sell.
Historically, traditional crypto-exchanges have found themselves unable to sustain liquidity deep enough for institutional investors to move into the market. This has been a problem that SBI aims to solve.
Ripple’s Role In Ensuring Strong Market
SBI has a stake in Ripple’s privately-held shares, and have collaborated with them to create SBI Ripple Asia, a company focused on tackling payment problems in Asia.
Moreover, Asia is also one of Ripple’s biggest markets, due to the sheer amount of inward remittances to the region. Ripple stands to benefit from investing heavily in the market.
Ripple has a product known as xRapid which is their endgame in terms of its cycle. xRapid is the newest method of facilitating cross-border remittances, and utilizes digital assets in order to facilitate the settlement of funds within 10 minutes.
The actual money moves across borders, and not credit dues like the existing SWIFT system. How xRapid works is that, the bank on the sender’s end puts the funds on the xRapid network, which is then used to buy a digital asset known as XRP on a crypto-exchange platform.
Then, the XRP is sent to an exchange in the receiving country within 5 seconds, and is sold for fiat. The fiat then makes its way on local payment rails to the receiver’s bank account. The whole process is completed within 10 minutes.
xRapid As A Catalyst Of Liquidity
For SBI as an established player in the Fintech space, the adoption of xRapid provides a unique opportunity to push the envelope of what is possible. Moreover, the synergy depicted in their plans seems to hinge on xRapid.
Forex services could be supercharged with lower fees and faster transactions using the power of xRapid’s blockchain. The securities market will provide a deep pool of liquidity supplemented by the forex market and the liquidity market.
This potentially creates an environment where multiple markets, such as cross-border payments, forex and a security market can be effectively disrupted. SBI also operates a net bank known as SBI Sumishin Net Bank, which offers international fund transfer services.
Ripple also said in a statement,
“Ripple will eventually integrate SBI VC’s APIs so that xRapid users — payment providers and banks who are transferring money into and out of Japan — can convert XRP to JPY and JPY to XRP instantly through SBI VC.”
This represents the dawn of a new age of disruption in the international Forex market, powered by blockchain.
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