According to rating Agency Moody’s, banks in Saudi Arabia can save up to $ 400 million per year using the software Ripple to facilitate cross-border payments. We will remind, last week the Central Bank of the Kingdom, the monetary authority of Saudi Arabia (SAMA), has signed an agreement with the American company Fintech Ripple and launched a pilot project.
In the report, the rating Agency said that the cost of processing remittances may be reduced by 50 percent through the use of new accounting technology.
“According to Moody’s, even a 10 percent reduction in the cost of completion and the management of transboundary transaction will save approximately 200-400 million dollars a year across the system,” the report says Moody’s.
According to analysts of the Agency, the blockchain may be of particular importance in the transaction of remittances. The Blockchain allows the parties to track information in a secure network without the need for third party verification. Banks and foreign exchanges at the present time it is necessary to increase administrative costs for third-party intermediaries for the exchange of foreign currency, which also increases the costs to their customers
Note, in Saudi Arabia, like other Gulf countries, a large number of migrant workers, which accounted for a significant proportion of transactions with a low cost when they transfer money to their home countries. The world Bank estimates that the fees for money transfers on average by 7.1 percent from each transaction, but costs may fall by 50 percent if companies use the lock to facilitate payments, said Moody’s.
“Successful pilot of the Ripple will help the participating Saudi banks to increase the transparency and efficiency of payments and ultimately to increase their profitability in cross-border transactions by reducing the cost of each transaction,” reads the Agency’s report.
In the long term, banks may also have higher returns due to large volumes of transactions, because the customer experience will improve thanks to cost savings and time.
However, even if the pilot is successful, inevitably, the widespread adoption of blockchain technology in cross-border payments are unlikely, whether in Saudi Arabia or around the world, warns Moody’s.
We will remind, the pilot project Ripple and SAMA based on the development of xCurrent. This is one of the three developments, along with new xVia and while using the least popular xRapid.
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