What this new IBM system brings
The laborious and costly process of making an international payment in different currencies can be frustrating. Yet it can also demand the need for more various mediums. Therefore the aim of this new system will be to improve the methods of cross-border monetary transfers. More boldly stated by IBM, it can reduce both the cost and transfer time “from days to seconds”.
Although only in “an early stage of implementation” as described by the vice-president of global financial markets at IBM, Keith Bear, the piloted systems have successfully transferred the first transactions. Bear goes on to talk about the time of production as being “determined through consultation with the banks that we are working with”.
As aforementioned, many banks are supporting this system through their individual participation with names including :
- Sumitomo Mitsui Financial Group
- Wizdraw HK
- Mizuho Financial Group
- National Australia Bank
- Bank Danamon Indonesia
- Bank Mandiri
- Bank Negara Indonesia
- Bank Rakyat Indonesia
- RCBC Philippines
- Kasikornbank Thailand
- TD Bank
Due to the scale of the system as of current, the primary interest will revolve around retail and SME payments in the South Pacific with the long-term focus of achieving involvement in global financial transfers of any payment type or values. Bear mentions the need for a “high level of adoption” in order to maximise value, however, he expresses the benefits of “starting off with a low-volume environment around the Pacific Islands” due to its status as a relatively “neglected payment corridor”. It also shows the potential and how they can grow the system.
The future is positive though with possible expansions involving the ability for parties to enter trade agreements, secure letters of credit, process instant payments and manage trade documents. Yet the user won’t even need to get involved with the cryptocurrency themselves. This is due to Stella’s custom cryptocurrency lumens acting as a “bridge currency between fiat and currencies”. KlickEx then works as a marketer for the sales of lumens for the banks.
Clearly, the efficiency of this method is attracting other payment providers and banks with more than 100 financial institutions joining Ripple’s enterprise blockchain network. SEB is one example who have processed more than the US $180m in payments with a client in Sweden. Other examples include BitPesa, an online payment platform helping thousands of clients in Southern Africa make cross-border payments using bitcoins.