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Why banks would benefit from Ripple?
Prepared by Stanley Loh, AirMoolah Hong Kong Limited
What Is Ripple?
Ripple is an Internet protocol that interconnects all the world’s disparate financial systems to enable the secure
transfer of funds in any currency, in real ?me, crea?ng an Internet of Value.
Transac?on Requirements
• Secure • Speed • Cost
DISTRIBUTED LEDGER TECHNOLOGY
Forward Looking Prime Minister
"Looking ahead, the banking industry is entering a new challenge ... The opera?ng environment has become more challenging, but on top of that, technology is moving very fast with new business models disrup?ng tradi?onal banking. For example, more and more people are making payments through their smartphones.” Lee Hsien Long, PM of Singapore
Singapore PM Urges Banks to Keep Current With Blockchain Technology!
More Tes?monials
“For the banks, it (Ripple) offers the opportunity to revamp exis?ng banking systems and speed up seZlements as long as transac?ons comply with tough money laundering and ‘know your customer’ regula?ons.” Philip Gomm, the Head of Banking and Payments, Capgemini Australia
“In all, the [banking] industry could save $20 billion a year by leveraging distributed financial technology” Santander Bank, Investor in Ripple.
Corpora?ons in Ripple Wagon
“The biggest barrier to [banks] adapJng [Ripple] is the incredible legacy systems.”
Dave McKay, CEO Royal Bank of Canada
“Blockchain Technology will fundamentally alter the financial services infrastructure.” NASDAQ CEO – Robert Greifield
NASDAQ will partner with Chain (a private enterprise Blockchain pla_orm) for the private market.
§ Santander Bank (investor) § Google (investor) § CME Group (investor) § UBS § CITI § RBC § Microso`
§ JP Morgan § TD Canada Trust § Barclays § Fidor Bank § CCDEK (Danish Stock Exchange) § Earthport § NASDAQ
Financial Ins?tu?ons Investment into One Chart, a Blockchain Technology company The different types of financial ins?tu?onal investor spans the en?re financial services spectrum—including tradi?onal banks (CIBC, Santander), investment banks (Goldman Sachs), insurance providers (New York Life, Mitsui Sumitomo), payment networks (Visa, American Express), and exchanges (CME Group, NYSE, Nasdaq)—an indica?on of the versa?lity and far-‐reaching impact of distributed financial technology.
Current Banking Sector Status
• Online banking is growing rapidly • Banking infrastructure is currently not geared for digital compe??veness – Changes in So`ware and Systems takes too long to develop, change, adjust, and implement
• Retail Banking market share is rapidly shrinking – Agile compe?tors are ea?ng their lunches – High percentage of Millenials have not been to tradi?onal bank outlets in a long ?me
The Future for Banking
• Banks will lose 60% of their retail profits to nimble fintech firms within the next decade. • 12,000 fintech startups • In Canada 50-‐70% of banking profits are in the retail sector
• Provincial, Municipal, and Private Chinese banks have not yet gone interna?onal. In 10 years the market will be vastly different. • They have lots of capital • They are already digitally prepared
• DiZo above for Indian Banks … • They are even more digitally prepared
Retail Banking is
in the Cash
World
Future of Cash
• Cash is no longer King! • China – Online purchasing is growing fast! • Southeast Asia – 85% is in Cash … posi?on falling • Amazon is ea?ng Walmart’s lunch! • Handling Cash is expensive
• Cashless is the Regent, soon to be King! • ePayments are precise • Human interven?on is largely reduced
Cross-‐Border Transac?ons
• Tradi?onal banks find RemiZance: § Tedious, embroiled with paperwork § Does not make much profits because their labour costs are high
§ Transac?ons too slow, and therefore o`en require follow-‐ups because of Clients’ impa?ence
§ Stuck transac?ons present more human work
T+0 Transac?ons Coming?
“A dozen countries have already upgraded their na?onal payment systems to real ?me, s?ll retaining the legacy central bank operator as the central clearing agent. In such cases, a centralized architecture was not the impediment to gesng to T+0.”
Depository Trust & Clearing Corporation (DTCC)
“$170M in annual opera?onal savings and $25M in annual return on reinvested capitT+2 would result in al from Clearing Fund reduc?ons, whereas T+1 would result in $175M in opera?onal savings and $35M in return on reinvested capital.”
BOSTON CONSULTING GROUP in Cost benefit for shortening the Se7lement Cycle
Benefits to Banks Banks play a major role in the Ripple Ecosystem There is much value they can achieve by using it.
• Banks can use Ripple to make faster payments in more currencies to more markets – all with lower risks and costs than is possible today.
• The three biggest benefits to banks are:
o Ripple acts as a common ledger to clear and seZle transac?ons in real ?me
o Ripple enables banks to provide customers with new interna?onal payments services
o Ripple enhances legacy systems to execute more complex transac?ons
• The Ripple Gateways will use Banks for SeZlement
A Dynamic New Start-up for P2P Payments with China T: +852 3975 2773 \ M: +852 9501 0773 \ [email protected] \ www.yuan2pay.com 15
Advantages of the Ripple Protocol
TYPICAL PAYMENT PAYMENT VIA RIPPLE
Reserves Bank provided 3rd party provided
Compliance costs Limited visibility = high costs Full visibility = lower costs
Reconciliation Manual Automatic
Speed (cross-border) 2+ days to settle 5 seconds to settle
Speed (domestic) Up to 2 days to settle 5 seconds to settle
Risk Multiple failure points Straight-through processing
FX One FX provider Competitive marketplace
*Yuan2Pay also acts as market maker.
Yuan2Pay & AirMoolah Rela?onship
• Yuan2Pay partners with Ripple as their Asia branch with the purpose of providing instant global payment.
• They are also the only payment gateway that offers RMB use to the whole of the Ripple user network.
• AirMoolah has a Strategic Alliance Agreement with Yuan2Pay
This rela?onship allows us to set up Ripple
Gateways worldwide
CONTACT: Stanley Loh, Email: [email protected] Tel: 1-‐604-‐721-‐7100 www.airmoolah.com