The Yomiuri Shimbun Services using blockchain (see below) technology that could slash remittance fees between banks are expected to start at some Japanese banks as soon as this March.
Blockchain, a digital ledger that provides the foundation for virtual currencies, could even see these fees drop to about one-tenth of their current level. This is a concrete example of how “fintech,” the use of information technology for conducting financial services, will bring tangible benefits to people’s daily lives.
About 60 Japanese financial institutions — including megabanks, Resona Bank and regional banks — have already completed tests using the technology. In March, several of them, including internet-only banks and local banks, will launch services that enable money to be remitted easily and cheaply by using a smartphone app.
The number of banks participating in such services is expected to steadily increase. Although each bank will decide the fee it charges for sending money, the new services reportedly will make it possible to reduce remittance fees from the current several hundred yen to about one-tenth of that amount.
Service customers will use a special-purpose app. Even if they do not know the bank account number of the person they want to send money to, cash can be sent by entering their mobile phone number or reading a QR code. In principle, money can be remitted 24 hours a day, 365 days a year.
Such a service would be useful in cases such as when people want to split the bill after dining at a restaurant. A person could read another’s QR code while still sitting at the table, and the money would be sent straight to that person’s bank account.
SBI Ripple Asia Co., a Minato Ward, Tokyo-based company providing blockchain services, built the system through serving as its administrative office. In the future, the service will enable money to be sent cheaply from ATMs, and allow it to be transferred overseas at a low cost.
Remitting money overseas currently requires a fee of several thousand yen, and it can take a few days until the money is received. Using blockchain would enable money to be sent almost instantly and is expected to significantly reduce remittance fees.
Money transfers between individuals and companies, which are intermediated by financial institutions, are centrally managed by the Zengin Data Telecommunication System. This system requires high operation and maintenance costs because of the many layers of tight security measures put in place to ensure money is transferred securely.
It has been announced that the Zengin system is scheduled to start operating around the clock, all year-round from Oct. 9.
In contrast to this system, the blockchain network decentralizes transaction record management across many computers, meaning if one of these computers breaks, the system will not go down. This makes it possible to create a safe, cheaper remittance system.
Moves to use blockchain for sending money are spreading among financial institutions around the world. Spain’s Banco Santander and Britain’s Standard Chartered have already put such services to practical use, and more than 100 international financial organizations are arranging to introduce them.
A decentralized management system in which the records of transaction data are shared across many computers. Its name comes from the fact that the transaction records are linked together like a chain. The system is cheap to run, highly resistant to disruptions, and transaction data is extremely difficult to falsify. Bitcoin is one service using blockchain.Speech
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