By Sarah Townsend
Exclusive: tie-up would be the latest blockchain investment by UAE remittance house
One of the UAE’s oldest money exchange houses says it is in talks with US blockchain start-up Ripple, over a tie-up to streamline payments.
UAE Exchange is eyeing a deal with Ripple to help it introduce real time, cross-border payments using blockchain technology.
Blockchain is an electronic transaction-processing and archive system that allows parties to track information in a secure network with no need for third-party verification.
It is the underlying technology that facilitates the use of virtual currencies or ‘crypto-currencies’, such as Bitcoin and Bitcoin Cash, which are becoming increasingly popular around the world.
UAE Exchange claims incorporating blockchain into its processes would help it cut the speed and cost of money transfers for its customers. The remittance house has already invested in two other blockchain-related companies within the past six months.
Promoth Manghat, CEO of UAE Exchange Group, told Arabian Business: “UAE Exchange has been significantly investing in blockchain technology. In June this year, the brand invested in Loyyal, a blockchain innovator building a global loyalty network.
“The brand also joined Bankchain, a community of banks for exploring, building and implementing blockchain solutions, early this year and are in the process of tying up [a deal] with distributed ledger start-up, Ripple, for real-time cross border payments.”
UAE Exchange is not the only regional financial services firm to regard blockchain as an important business strategy in an increasingly digitalised world.
In February, National Bank of Abu Dhabi (NBAD) formed a partnership with Ripple to speed up intra-bank and cross-border payments.
And, last October, the UAE’s largest lender Emirates NBD announced it was working with Indian bank ICICI on a pilot project to use blockchain for global remittances and trade finance.
Jameel Ahmad, vice-president of corporate development and market research at FXTM, explained to Arabian Business: “Adopting bitcoin for remittance and forex business is where the industry is heading.
“It is a massive market: worldwide, around 230 million people send $500 billion in remittances every year, using traditional firms like Western Union, MoneyGram and other smaller players.
“Collectively, these remittance facilitators control over 1 million retail locations and handle more than 25 percent of the world’s annual remittance transactions.
“Despite their popularity, the typical international money transfer requires a lot of steps for facilitation, and bitcoin streamlines that process.”
I am thrilled to see more institutions in the region believing in blockchain based solutions to help streamline operations, improve efficiency, reduce cost, and improve transparency. Unfortunately, Ripple does not support "Smart Contracts", which means institutions can't use Ripple when automation of processes "If-Then-Else" is required. Ripple is a wonderful organization with a large network and there are solutions which would help reduce the shortcomings of the Ripple solution; such as Soffitto and Ateon.