Ripple continues to expand with the announcement that by the end of this year it will operate a FinTech firm focused on cross-border payments out of Dubai.
Its global infrastructure innovation head, Dilip Rao, says the company is not new to the Middle East and claims the region is its fastest growing market.
Taking on SWIFT
Ripple is competing in a market currently dominated by SWIFT system, which it claims is very slow and inconvenient.
In May of this year, Ripple made public the first results from the first pilot trials of its remittance platforms. It said the tests resulted in 40-70% savings on FX exchange rates and faster settlement of transactions, cutting the time of a cross-border payment from up to three days down to two-to-three seconds.
“We now have three banks in Saudi Arabia, two in Kuwait, one in Bahrain, one in Oman, a couple in the United Arab Emirates, and it really is our fastest growing marketplace,” says Rao.
“Our focus initially is on cross-border payments because we think that’s where there is the most friction,” says Rao. “In this part of the world, there is a huge requirement for cross-border transactions. That will support the economy both within the region and the rest of the world.”
Rao emphasises the importance the Middle East has in remittances and adds that Ripple, the company behind XRP, the third most significant crypto by market capitalisation with about $18 billion, has already signed up some 200 financial institutions for its cross-border platform.
The National Commercial Bank of Saudi Arabia has partnered with Ripple in its new venture. It has more than five million customers around the globe.
A multi-billion dollar market
The World Bank reported in April that the cross-border remittances market was estimated to reach $485 billion in 2018. It also stated that remittances in the Middle East and North Africa grew 9.3% to $53 billion in 2017, and are expected to increase to 4.4% to $56 billion.
Rao acknowledges that his firm is venturing into a predominantly Muslim region and says that his firm’s blockchain products and solutions comply with Sharia Law.
“Being able to know what are the underlying assets to a transaction. Being able to identify the participants in a transaction. Being able to be clear about the contractual roles and responsibilities and being able to reduce risks are all aligned with Sharia principles,” he concludes.