Siam Commercial Bank – Pioneering RippleNet’s “Multi-hop” Feature

November 20, 2018

In every region across the world, Cross-border payment is always a hurdle because of the inefficient management of global liquidity. Especially in South Eastern Asian Nations (ASEAN), which has been largely underserved by correspondent banking, this hurdle raises cross-border payment fees and causes inefficient operation.

As usual,  every frictionless payment needs a direct one-to-one connection (or bilateral relationship) between financial institutions to settle. But starting of September 28, Siam Commercial Bank (SCB) would be the first financial institution on RippleNet to apply a key feature called “multi-hop”, which allows them to cut all the wordy procedures. With Multi-hop, the requirement for a bilateral relationship between the originator and beneficiary institutions to receive and forward on payment become unnecessary anymore.

Regional cross-border payments require expensive workarounds in ASEAN until now due to the shortage of standard in integration. Countries even nearby each other have to convert to U.S dollars, then pay through multiple correspondent banks before finally being exchanged to the currency used at the beneficiary institution. This wordy process requires so many kinds of fees, including two sets of foreign exchange. As a result, there is hardly any support for the low-value payments that small and medium enterprises (SMEs) and remitters have to make.

Multi-hop will open a new era for SCB, they can help their clients do payments directly to the beneficiary institutions, which means the speed to transact money will be faster than ever. This led to fade cross-border in ASEAN, the Smaller financial institution will be able to make payment into ASEAN easily in spite of its size or pool of liquidity.

The benefit that multi-hop brings is much beyond the financial institutions themselves. Now, Every customer of RippleNet institution can see their payment settler faster, cheaper and much more transparently whatever they are big or small. Which remitters and SMEs can’t ever have before. SMEs are estimated to be responsible for creating 60 percent of employment in the developing world,  but it must be up to 70 percent in ASEAN countries. Multi-hop not only helps institution’s customers, employees but also shares the burden with the government in countries where this key feature is applied.


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