Why  banks  would  benefit    from  Ripple?  

Prepared  by  Stanley  Loh,    AirMoolah  Hong  Kong  Limited  

What  Is  Ripple?  

Ripple  is  an  Internet  protocol  that  interconnects  all  the  world’s  disparate  financial  systems  to  enable  the  secure  

transfer  of  funds  in  any  currency,  in  real  ?me,  crea?ng  an  Internet  of  Value.    

Transac?on  Requirements  

•  Secure  •  Speed  •  Cost  

DISTRIBUTED  LEDGER  TECHNOLOGY  

Forward  Looking  Prime  Minister  

"Looking  ahead,  the  banking  industry  is  entering  a  new  challenge  ...  The  opera?ng  environment  has  become  more  challenging,  but  on  top  of  that,  technology  is  moving  very  fast  with  new  business  models  disrup?ng  tradi?onal  banking.  For  example,  more  and  more  people  are  making  payments  through  their  smartphones.”                                                      Lee  Hsien  Long,  PM  of  Singapore                    

Singapore  PM  Urges  Banks  to  Keep  Current  With  Blockchain  Technology!  

More  Tes?monials  

“For  the  banks,  it  (Ripple)  offers  the  opportunity  to  revamp  exis?ng  banking  systems  and  speed  up  seZlements  as  long  as  transac?ons  comply  with  tough  money  laundering  and  ‘know  your  customer’  regula?ons.”                                            Philip  Gomm,  the  Head  of  Banking                                                                                                                          and  Payments,  Capgemini  Australia    

“In all, the [banking] industry could save $20 billion a year by leveraging distributed financial technology”                                                                                                Santander  Bank,  Investor  in  Ripple.  

Corpora?ons  in  Ripple  Wagon  

“The  biggest  barrier  to  [banks]  adapJng  [Ripple]  is  the  incredible  legacy  systems.”    

Dave McKay, CEO Royal Bank of Canada

“Blockchain  Technology  will  fundamentally  alter  the  financial  services  infrastructure.”  NASDAQ  CEO  –  Robert  Greifield  

 NASDAQ  will  partner  with  Chain  (a  private  enterprise  Blockchain  pla_orm)  for  the  private  market.  

§  Santander  Bank  (investor)  §  Google  (investor)  §  CME  Group  (investor)  §  UBS  §  CITI  §  RBC  §  Microso`  

§  JP  Morgan  §  TD  Canada  Trust  §  Barclays  §  Fidor  Bank    §  CCDEK  (Danish  Stock  Exchange)  §  Earthport  §  NASDAQ    

Financial  Ins?tu?ons  Investment  into  One  Chart,  a  Blockchain  Technology  company  The  different  types  of  financial  ins?tu?onal  investor  spans  the  en?re  financial  services  spectrum—including  tradi?onal  banks  (CIBC,  Santander),  investment  banks  (Goldman  Sachs),  insurance  providers  (New  York  Life,  Mitsui  Sumitomo),  payment  networks  (Visa,  American  Express),  and  exchanges  (CME  Group,  NYSE,  Nasdaq)—an  indica?on  of  the  versa?lity  and  far-­‐reaching  impact  of  distributed  financial  technology.  

Current  Banking  Sector  Status  

•  Online  banking  is  growing  rapidly  •  Banking  infrastructure  is  currently  not  geared  for  digital  compe??veness  –  Changes  in  So`ware  and  Systems  takes  too  long  to  develop,  change,  adjust,  and  implement  

•  Retail  Banking  market  share  is  rapidly  shrinking  – Agile  compe?tors  are  ea?ng  their  lunches  – High  percentage  of  Millenials  have  not  been  to  tradi?onal  bank  outlets  in  a  long  ?me  

The  Future  for  Banking  

•  Banks  will  lose  60%  of  their  retail  profits  to  nimble  fintech  firms  within  the  next  decade.  •  12,000  fintech  startups  •  In  Canada  50-­‐70%  of  banking  profits  are  in  the  retail  sector  

•  Provincial,  Municipal,  and  Private  Chinese  banks  have  not  yet  gone  interna?onal.  In  10  years  the  market  will  be  vastly  different.  •  They  have  lots  of  capital  •  They  are  already  digitally  prepared  

•  DiZo  above  for  Indian  Banks  …  •  They  are  even  more  digitally  prepared  

Retail Banking is

in the Cash

World

Future  of  Cash  

•  Cash  is  no  longer  King!  •  China  –  Online  purchasing  is  growing  fast!  •  Southeast  Asia  –  85%  is  in  Cash  …  posi?on  falling  •  Amazon  is  ea?ng  Walmart’s  lunch!  •  Handling  Cash  is  expensive  

•  Cashless  is  the  Regent,  soon  to  be  King!  •  ePayments  are  precise  •  Human  interven?on  is  largely  reduced  

Cross-­‐Border  Transac?ons  

•  Tradi?onal  banks  find  RemiZance:  §  Tedious,  embroiled  with  paperwork  §  Does  not  make  much  profits  because  their  labour  costs  are  high  

§  Transac?ons  too  slow,  and  therefore  o`en  require  follow-­‐ups  because  of  Clients’  impa?ence  

§  Stuck  transac?ons  present  more  human  work  

T+0  Transac?ons  Coming?  

“A  dozen  countries  have  already  upgraded  their  na?onal  payment  systems  to  real  ?me,  s?ll  retaining  the  legacy  central  bank  operator  as  the  central  clearing  agent.  In  such  cases,  a  centralized  architecture  was  not  the  impediment  to  gesng  to  T+0.”

Depository Trust & Clearing Corporation (DTCC)

 “$170M  in  annual  opera?onal  savings  and  $25M  in  annual  return  on  reinvested  capitT+2  would  result  in  al  from  Clearing  Fund  reduc?ons,  whereas  T+1  would  result  in  $175M  in  opera?onal  savings  and  $35M  in  return  on  reinvested  capital.”    

                                                                 BOSTON  CONSULTING  GROUP  in  Cost  benefit  for  shortening  the  Se7lement  Cycle    

Benefits  to  Banks  Banks  play  a  major  role  in  the  Ripple  Ecosystem    There  is  much  value  they  can  achieve  by  using  it.    

•  Banks  can  use  Ripple  to  make  faster  payments  in  more  currencies  to  more  markets  –  all  with  lower  risks  and  costs  than  is  possible  today.  

•  The  three  biggest  benefits  to  banks  are:  

o  Ripple  acts  as  a  common  ledger  to  clear  and  seZle  transac?ons  in  real  ?me  

o  Ripple  enables  banks  to  provide  customers  with  new  interna?onal  payments  services  

o  Ripple  enhances  legacy  systems  to  execute  more  complex  transac?ons    

•  The  Ripple  Gateways  will  use  Banks  for  SeZlement  

A Dynamic New Start-up for P2P Payments with China T: +852 3975 2773 \ M: +852 9501 0773 \ info@yuan2pay.com \ www.yuan2pay.com 15  

Advantages of the Ripple Protocol

TYPICAL PAYMENT PAYMENT VIA RIPPLE

Reserves Bank provided 3rd party provided

Compliance costs Limited visibility = high costs Full visibility = lower costs

Reconciliation Manual Automatic

Speed (cross-border) 2+ days to settle 5 seconds to settle

Speed (domestic) Up to 2 days to settle 5 seconds to settle

Risk Multiple failure points Straight-through processing

FX One FX provider Competitive marketplace

*Yuan2Pay also acts as market maker.

Yuan2Pay  &  AirMoolah  Rela?onship  

•  Yuan2Pay  partners  with  Ripple  as  their  Asia  branch  with  the  purpose  of  providing  instant  global  payment.    

•  They  are  also  the  only  payment  gateway  that  offers  RMB  use  to  the  whole  of  the  Ripple  user  network.  

•  AirMoolah  has  a  Strategic  Alliance  Agreement  with  Yuan2Pay  

 This  rela?onship  allows  us  to  set  up  Ripple  

Gateways  worldwide  

CONTACT:  Stanley  Loh,  Email:    stanleyloh@airmoolah.com  Tel:  1-­‐604-­‐721-­‐7100      www.airmoolah.com