The growth of FinTechs, or technology enabled financial services, has skyrocketed in an attempt to eliminate the confines of traditional banking. According to The World Economic Forum,
“Two and a half billion people around the world are un- or underbanked.”
This is where FinTechs have come in, making financial services more accessible than ever before, especially to those who may be turned away by traditional banks.
A critical function served by Fintechs is micro-financing and remittance payment transactions. At present, the UAE’s 9 million population consists of 90% expatriates, making for a large international remittance market. According to Ken Research, the country employs much of its labor force from: India, Bangladesh, The Philipines, Pakistan, Indonesia, and more. Further, according to the Middle East Remittance Market Outlook Research Report:
“Inward remittance in UAE is expected to reach around $1,648 million in 2019; whereas outward remittance from UAE is expected to touch $28,207 million.”
Silicon Valley based FinTech Startup Ripple is gaining more traction in the realm of speedy cross-border remittance payments, and, according to Arabian Business, UAE Exchange, a major UAE remittance house, is seeking to close a deal with Ripple to help introduce real-time remittance payments utilizing blockchain technology.
“Blockchain is an electronic transactions-processing and archive system that allows parties to track information in a secure network with no need for third-party verification.”
In early February 2017, The National Bank of Abu Dhabi (“NBAD“), the largest bank of the Emirates, introduced real-time cross-border payments on the blockchain via Ripple, stating that Ripple would allow for near-instant delivery times, cutting of costs and transparency in the transaction process. The NBAD has significant presence in the Middle East and Asia and conducts transactions with: Malaysia, China, South Korea, Hong Kong and India, as mentioned by CryptoCoins News.
Jameel Ahmad, a Dubai-based VP for FXTM stated:
“Adopting bitcoin for remittance and forex business is where the industry is heading.”
Further, Ahmad stated that:
“The typical international money transfer requires a lot of steps for facilitation, and bitcoin streamlines that process.”
Due to such high volumes of remittance transactions in the region, a scalable solution for global payments consisting of low costs and reliability is critical. Perhaps Ripple’s services may just be that.