Banks Improve Their Services with Ripple and Its Products
Banks and other financial institutions are working very hard so as to improve their products and services. At the same time, in the last ten years, different changes have been made in the banking industry to reduce fraud and terrorism in the industry.
According to an investigation conducted by Accuity Resarch, there was a 25% drop in global correspondent banking relationships. This is related to de-risking policies taken by banks in certain geographic regions.
This is causing important regional banks struggle to affordably and securely serve the international transactions needs of their customers. And this situation is causing several regions in the world to be excluded from mainstream financial systems.
In smaller and riskier regions, the disconnect in correspondent banking has increased the costs of remittances. The situation contrasts with what is happening in developed countries, where remittance prices have substantially fallen. This situation is hurting and damaging smaller banks around the world.
Consumers cannot be outside the financial system, immigrants and/or refugees need money at all times and send money back to their home countries and their families. Bank-based remittance prices grow or banks just simply don’t offer any possibility to send or receive money from abroad.
In order to solve these problems, users move to other companies like Western Union or MoneyGram, which are money transfer operators (MTOs). MTOs are able to serve customers and offer remittances and move money abroad. These companies have a deep impact in the market share of banks.
Because of this situation, banks are becoming very creative in order to build remittance and money transfer corridors. Working with long – and expensive – chains of partner banks in different countries, they are able to link various currencies.
Additionally, these bank partners sometimes operate in very difficult and no transparent ways. Furthermore, they add costly operations and fees.
So what can regionals banks do to solve this situation? Well, the first point is to overcome the risk to a multiple-hop corridor and find bank partners to create new and more reliable corridors.
With xCurrent and RippleNet it is possible to solve both issues. For example, xCurrent allows banks to send and settle money instantly, and with a newly implemented end-to-end messaging tied to settlement it creates new levels of transparency.
RippleNet is able to create new corridors for regional banks. The decentralized banking network that has been created by Ripple includes over 100 different banking institutions. During the next week in Dubai, members of this network will meet and forge new connections.
These relationships level the playing field for regional banks. These institutions are now able to overcome the cost and risk associated with traditional correspondent banking models and offer better services to their customers independently from where they are.