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A new consortium of Japanese banking and financial services giants will seek to use blockchain technology to provide domestic and foreign exchange services.

Japanese financial services giant SBI Holdings and its subsidiary SBI Ripple Asia, have collaborated to launch a consortium that will seek to use blockchain innovation – the technology underpinning bitcoin – in new payment and settlement services from October 2016.

A press release [PDF] from SBI Holdings has revealed that the consortium will be named the “Consortium for Considering Blockchain Technology to Centrally Provide Domestic and Foreign Exchange Services”.

Inaugural members of the new consortium will see several financial companies from the country joining, including the Bank of Yokohoma and SBI Sumishin Net Bank, Ltd. Altogether, some 15 banks are expected to be amongst the list of inaugural members in October 2016. That number is expected to double to 30 in March 2017.


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Instant Borderless Settlements via Blockchain

The two aforementioned banks are specifically named for already endeavoring with various FinTech initiatives prior to the consortium while the new working group will specifically focus on blockchain-based payment and settlement services.

The new consortium will seek to address the new trend of 24-hour and real-time settlement services stemming from the rapid advances in information and communications technology (ICT). The banking consortium will also study the demand for small-value remittance as well as the borderless society that sees cross-border ecommerce coming to the fore.

SBI Ripple Asia, a newly formed company that sees FinTech firm Ripple and SBI Holdings collaborate to serve ASEAN countries including Japan, China, Taiwan and Korea, among others, will serve as the consortium’s secretariat.

The working group aims to create a settlement platform for domestic and foreign exchange services using Ripple-developed blockchain technology by March 2017.

Rushing Toward Same-Day Settlements

Japan has been at the center of a number of blockchain and fintech-related investments in recent times. Notable funding rounds include that of major bitcoin exchange Kraken which saw a “multi-million dollar agreement” from SBI Investment, the venture capital arm of SBI Holdings earlier this year.

The country is also seeing other banking giants invest in blockchain technology. In mid-2016, major banking group Mizuho Financial announced  partnership with technology giant IBM to test blockchain technology’s potential in settlements.

In March 2015, Mizuho announced the results of a successful blockchain trial, one that saw a collaboration with technology firm Fujitsu Labs Ltd., result in same-day settlements of cross-border securities transactions.

 Featured image from Shutterstock.

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Posted by Samburaj Das