More MENA banks to sign up in upcoming months
Dilip Rao Ripple Managing Director Asia Pacific & MENA in an interview with UNLOCK BC talks about how banks in the MENA region are picking up on the Blockchain solutions and using it to improve and innovate their offering. As he stated, “The first client we had in the region was NBAD (National Bank of Abu Dhabi now FAB First Abu Dhabi Bank). I was impressed with how quickly they implemented Ripple Blockchain Settlement solution. From the time we met with them at SIBOS 2015 until May of 2016 a pilot had already been carried out and by the end of 2016 they had gone live and connected with one of their branches in Oman and then India. This is certainly not the usual implementation time of banks.”
As for why banks in the region are showing interest, Rao explains, “the first reason is that most of them are using SWIFT which is viewed as expensive and inherently slow. SWIFT is a messaging system and not a settlement system. This means it gives instructions to make payments but does not actually execute these payments. In contrast Ripple offers real-time settlement 24hours a day 7 days a week. With the Middle East having a lot of corridors especially with remittances, banks want to win back this business from exchange houses and see Ripple on blockchain as a solution.”
With an increasing push to get more and more people to use banking services, Banks are aware that clients want to be able to send funds and have them delivered immediately. According to Rao, “Ripple provides new capabilities what we call bi-directional information exchange. The two banks using Ripple can exchange information about sender, account number, and make sure all details are correct while the transaction is being handled. This is not available in SWIFT. This enables banks to collaborate and provide a richer experience.”
The effect of more efficient, real-time, payment transactions will benefit not only individual but also trade within the region says Rao. He explains, “A lot of trade happens in the region and with Ripple buyers and sellers will have more visibility on their transactions. A seller will know when he has been paid in order to ship the goods. Today more and more companies are dealing less with letters of credit and more through open accounts. Blockchain payment solution on Ripple platform will enable banks to lift up the whole trade and better compete against global players.”
This is only the beginning. As Rao states, “ There are other Ripple implementation with banks in the region, although I cannot disclose names and geographies but what I can say is that in the next three months more banks will announce either pilot projects or active implementations.” He adds, “In an effort to grow the Ripple network I am now based in India to bring on more banks there as I know there is a lot of activity between banks in MENA and India.”
As for the future Rao expects many changes first with regards to the growth of Ripple, the evolution of banks and finally the future of Blockchain. When it comes to Ripple, Rao states, “As the Ripple network grows in an effort of banks to deliver new products and services, there will be a shift from traditional. We will grow hopefully to the 11,000 banks that Swift currently has. Even now we are seeing this shift and a good example is Japan exploring ripple for domestic clearing and settlement, because today a lot of countries internal settlement takes three days like the USA and elsewhere.”
The future of banks and their existence Rao states, “Countries see banks as systematically important so I don’t believe banks will cease to exist, but their role will change. Banking services will become commoditized and will be more in the backend. People don’t wake up in the morning and say hey I want to go do some banking, but they do want to buy, sell, and transact so the banking service will get absorbed into the transaction as long as it is done with integrity. Identity credit worthiness might be carried out by AIs, and AIs might even provide private investment advice.”
As for MENA region, Dubai and Blockchain Rao believes that for the first time the region can use Blockchain technology to innovate and be the first in the region to implement latest innovations. He states, “I see an appetite here for innovations and there is a good opportunity for banks and others in the region to leapfrog into the future.”
