Federal bank, an Indian private sector bank, has sought out global blockchain company Ripple Inc. for providing blockchain powered fintech solutions that would facilitate cross-border remittance networks for NRIs (Non-Resident Indians). The agreement between Ripple Inc. and Federal Bank were signed between the CEOs Mr. Shyam Srinivasan and Mr. John Mitchell on 28 March and a circular was released to the Bombay Stock Exchange,
“This is to inform Federal Bank has entered into a partnership with Ripple Inc., a blockchain supported global remittance company, for cross border remittance through its company. Powered by blockchain enabled solutions the ripple platform ensures cross-border transactions much safer and secured.”
Due to the partnership with Ripple Inc., the shares of Federal Bank surged 2% on March 29. Following in the blockchain bandwagon, Federal Bank is the 5th Indian bank to become a Ripple partner after Yes Bank, Axix Bank, IndusIND and Kotak Mahindra and holds about 15% of market share in remittances.
According to Gulf News, Federal bank has launched two blockchain based remittance platforms in UAE, which would enable customers to make remittances from the Middle East to India through virtual payment networks. By upgrading the National Payment Corporation of India’s Unified Payment Interface, NRIs in UAE can transfer money by using an easy-to-remember VPA (Virtual Payment Address). CEO of Federal Bank, Mr. Shyam Srinivasan told Gulf News,
“For long, Federal Bank has endeavoured to bring our non-resident clientele closer to their homes. Each of our digital offerings has been designed with this objective in mind.” and added, “Federal bank is an important part in the remittance eco-system to India, and so it is only natural for us to offer the latest technology to our customers and remittance partners such as exchange houses and banks.”
RippleNet changing cross border remittances
Many remittance firms are employing the Ripple blockchain network to improve on the cross border remittance system such as Finablr, UAE Exchange, Unimoni, SendFriend, MoneyGram, Mexico based Cuallix and Western Union. Ripple Labs Inc. CEO Brad Galinghouse had earlier told Bloomberg TV that his blockchain company is looking to overtake SWIFT stating that the technologies used by banks hasn’t evolved, implicitly referring to SWIFT’s methods as outdated. With RippleNet cutting down on transfer time and cost, it is swiftly gaining market share in the cross border payment and remittances which is traditionally dominated by SWIFT system
“In that we now signed over 100 banks- some of the largest SWIFT enabled banks in the world are now using Ripple technology.” and he added, “What we are doing and executing on a day-to-day basis is in fact taking over SWIFT.”