The global financial industry has taken a giant step forward as KBank (South Korea’s largest digital-only bank) partners with Ripple—a world leader in developing solutions for blockchain technology—to reimagine the way cross-border money transfers are done. The companies will work together to develop a new way of transferring money through on-chain remittance systems that offer significantly lower costs and faster settlement for cross-border payments than current banking systems allow.
A Strategic Move Beyond SWIFT
Over the past several years, international money transfers have been made through correspondent banking systems (like SWIFT). While these have been proven to be an effective way of completing these transactions; the disadvantage of an old system is that it can take a significant amount of time (up to several days) for one transaction to complete due to the multiple banks that need to be paid for their work (some charging very high fees for each transfer). KBank wants to desperately eliminate these time wasting intermediaries by using blockchain technology. By using an onchain system to send money; the transaction will complete minutes after being sent. In addition to improving the speed of the transaction, KBank customers will only pay a single fee (through the network to KBank); drastically improving the cost-efficiency and transparency associated with sending money internationally.
Inside the Palisade Wallet Tech
At the heart of this new initiative is Palisade, Ripple’s advanced software-as-a-service digital wallet. Ripple acquired the Palisade platform earlier this year as part of a massive four billion dollar investment push into crypto-related infrastructure. KBank has partnered with a reputable entity to ensure an online banking platform that meets the criteria of superior security solutions and a high level of regulatory compliance including, but not limited to, anti-money laundering compliance. By switching to this robust model, the digital lender gains access to built-in compliance tools, ensuring that the new payment rails are both incredibly fast and strictly secure.
Phased Testing for the UAE and Thailand
This ambitious project is already well underway. The two companies recently completed the first phase of a proof-of-concept, which successfully validated a standalone wallet-based remittance system. KBank has begun its second phase of testing by integrating real accounts from real customers into KBank’s internal banking systems to simulate a test of the technology in real-world conditions. The ongoing second phase will see KBank continue the assessment of overall stability, speed, and transparency for real-time transfers of funds utilizing blockchain technology over two of the busiest remittance corridors for both countries — the United Arab Emirates and Thailand.
Preparing for the Digital Asset Basic Act
All spaces in which one can operate depend greatly on timing. The timing of this alliance coincides perfectly with the very large changes in regulation being implemented at this moment in South Korea. At present, the National Assembly is completing the final stages of developing the Digital Asset Basic Act, which will provide a new legal framework for regulating decentralised finance and digital tokens. In anticipation of this new regulatory framework, all of South Korea’s major banks are currently working quickly to create the infrastructure needed to support legal and stable transaction systems. KBank executives stated that their current process of verifying technical solutions is a strategic effort to position them well by proactively preparing for the future legalisation and widespread acceptance of stablecoin transactions.
A New Era for South Korea’s Financial Sector
Being the exclusive bank for Upbit, which is the biggest exchange for cryptocurrency in Thailand, KBank is well-positioned to drive the digital movement. KBank’s number of customers has grown from 2 million in 2020 to 15 million currently due to the sheer number of users on Upbit. South Korea remains one of the most active retail crypto markets globally, with daily trading volumes that routinely rival traditional stock markets. As the new national regulations finally take effect, KBank’s early infrastructure deals with global players like Ripple will likely cement its absolute dominance in the next generation of modern digital banking.
