Thailand’s Siam Commercial Bank is First to Use Ripple’s “Multi-Hop” Feature
Siam Commercial Bank (SCB) will be the first financial institution on RippleNet to utilize a new feature called “multi-hop” that facilitates cheap international transactions. Ripple announced the news in a press release earlier today.
SCB is one of the country’s largest banks. Thanks to Ripple’s multi-hop feature, the bank can settle payments on behalf of other financial institutions on the network, eliminating the need for a one-to-one connection between financial institutions to settle a payment.
Thanks to Ripple’s multi-hop, SCB will be able to receive a payment, then forward that payment without needing a bilateral relationship between the originator and the final destination.
The technology is expected to lower international transaction costs for banks, institutions, and customers.
SCB plans to use multi-hop to facilitate transactions across the ASEAN region without exchanging currencies multiple times and paying heavy fees along the way. With Ripple, SCB can make international transfers between different financial institutions in different countries using RippleNet without transacting through multiple regional currencies and losing money along the way.
In their press release announcing the news, Ripple claimed that banks in the ASEAN region have traditionally encountered problems when making transactions between countries. Because of inefficient management of global liquidity, banks in the Association of South Eastern Asian Nations (ASEAN) region have struggled to manage cheap cross-border payments. The global banking industry has also historically underserved the region, which is why cross-border payments in these countries are inefficient and come with high fees.
Thanks to Ripple’s multi-hop, banks can lower fees on international payments. Multi-hop makes international payments easier for banks within the ASEAN region and outside of it. Multi-hop democratizes access to each country’s banking system, making payments easier regardless of the payment size or the financial institution’s pool of liquidity.
Multi-hop is expected to significantly lower international transaction costs for banks in the ASEAN region. However, customers can also enjoy powerful benefits. Customers of institutions that use RippleNet, for example, will enjoy faster, cheaper, and more transparent payments. That means remitters and SMEs, among other institutions, will be able to offer better rates to customers.
Ultimately, the ASEAN region has been traditionally under-served by mainstream financial institutions. Siam Commercial Bank (SCB) aims to lead the way in connecting ASEAN to the global financial system in a cheap, efficient way thanks to its partnership with Ripple and its use of the multi-hop feature on RippleNet.