It is not surprising to find out a Japanese bank consortium is looking to integrate blockchain technology. What is somewhat surprising is how the group wants to use Ripple’s blockchain to improve their payment infrastructures. The plan is to use this technology for domestic and international payments in the future.
Ripple Gets Some Support From Japanese Banks
To put this news into perspective, it was only a matter of time until this announcement would take place. The Japanese bank consortium has conducted a pilot program with this technology, where all 47 members got a hands-on approach with the Ripple protocol. During the pilot program, a cloud platform called RC Cloud was created. As a result of this test, all 47 consortium members can complete real-time money transfers in Japan and across borders.
It has to be said, this news is a serious validation of Ripple’s technology in the financial industry. This particular consortium represents over 30% of all Japanese banks. Gaining that much support from the get-go is invaluable for any fintech startup, especially those who deal with blockchain technology. Smaller banks processing lower volumes of payments in Japan require their “bigger” partners to clear these transactions.
By using blockchain technology, all of those concerns are alleviated immediately. Being a member of clearinghouses involves a significant membership fee, which can entirely be removed once blockchain technology makes an impact. Turning the banking system into a less expensive, yet still profitable business will be challenging, yet the confidence in Ripple seems more than justified at this stage.
It is estimated Ripple’s blockchain technology will bring transaction costs down by as much as 60%. That is quite a significant number for both large and small banks in Japan. Moreover, it would not matter how big or small the transaction volume is, as the associated fees would remain virtually the same. It is also believed a few dozen more banks will become part of this bank consortium in the near future. RC Cloud is scheduled for commercialization later in 2017, albeit no specific timeframe is provided at this time.
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