Several Japanese banks are planing to use blockchain technology for their foreign exchange services. About 30 financial institutions are expected to be on the membership list in March 2017.

SBI Holdings and its subsidiary SBI Ripple Asia have decided to launch a consortium, according to a statement sent on Thursday. SBI Ripple Asia is a newly formed provider in Asia of next-generation settlement platforms based on distributed financial technology.

Inaugural members of the consortium will comprise, among others, the Bank of Yokohama and SBI Sumishin Net Bank.

Considering New Types of Payment

Blockchain technology, representing innovative and key technology in FinTech, offers the potential for the user to build a system of higher flexibility and efficiency while improving the stability of financial institution systems.

While the Bank of Yokohama and SBI Sumishin Net Bank have been implementing various fintech initiatives at an accelerated pace, the Consortium will begin to consider new types of payment and settlement services that utilize blockchain technology, starting from October 2016. This is designed to address:

  • a trend of 24-hour and real-time settlement resulting from innovative changes occurring in recent years to information and communications technology (ICT), coupled with changing customer behaviors and way of living in society;
  • increasingly diverse needs for remittance concerning small-value settlements;
  • a borderless trend caused by cross-border ecommerce and Japanese companies’ expansion into Asian countries.

SBI Ripple Asia, the provider of distributed financial technology-based next-generation settlement platforms in Asia, will serve as the secretariat of the Consortium, which by March 2017 will create a settlement platform for centrally providing both foreign and domestic exchange services using Ripple.

Transact Directly

Ripple solutions lower the total cost of settlement by enabling banks to transact directly with real-time certainty, and the technology has already been utilized mainly by U.S. and European financial institutions.

The Consortium’s member financial institutions will continue to discuss, both from technical and operational perspectives, how to utilize Ripple and talk about the duties that domestic and foreign exchange services should fulfill.

About 30 Banks Expected

Starting from late August 2016, financial institutions will be solicited to become members of the Consortium, and at its inception in October of the same year, the inaugural members will likely consist of 15 banks or so with about 30 banks expected to be on the membership list in March 2017.