Recently in Abu Dhabi, CNBC’s Hadley Gamble interviewed Ripple’s Managing Director for South Asia & MENA, Navin Gupta, who discussed the process of remittance and opportunities for the company in the Middle East. According to Gupta, having an exemplary use-case is one of the most important things in the space, and existing remittance systems are far too slow and error-prone to be able to sustain their current model. He added,
“Ripple is here to change that, working with existing financial institutions, banks and PSPs within the regulations of the country. To my mind, the use-case is much more important, and we enable that today for hundreds of financial institutions around the world. Today, we’re here and we have a great distribution network working with partners, enabling [people] to send money back home.”
According to Gupta, most of the cross-border business today is dominated by banks and payment service providers, who own 100% of the market. That is what Ripple is after, Gupta said.
“We’re changing the plumbing and replacing it with post-Internet era plumbing. With that, the same financial institutions can be instant, error-free and make sure they can provide that service in a very transparent manner.”
The Ripple exec also spoke about how traditionally, banks use pre-funded Nostro accounts to facilitate cross-border remittances, and that is why it becomes so expensive to send money back home. Ripple however, uses the cryptocurrency XRP as a bridge asset to provide liquidity on demand.
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“When you send your Dirhams back in GBP to London, you should know exactly how much money will be delivered back home. Once the cost [of pre-funded Nostro accounts] is taken away, they can fund on-demand, and provide a much better, cheaper service to their customers.”
Gupta also said that there’s a huge opportunity in the Middle East for companies targeting the remittance market. He added that he wouldn’t be surprised if two or three global brands originate out of the GCC in the remittance space over the next five years.
“I think there’s a huge opportunity. If you look at the ecosystem in the US, it has large domestic markets, VC funding and companies can experiment with the regulatory framework that exists today. The same opportunity exists in the Middle East — it’s the largest remittance market in the world.”