California-based technology firm Ripple has disclosed plans of launching a subsidiary in Dubai, United Arab Emirates by the end of the year.
Announced by Ripple’s global infrastructure innovation head Dilip Rao during his speech at the recent Global Islamic Economic Summit held in Dubai, Rippled expansion plans would primarily focus on the FinTech firm’s cross-border payments service. Having previously partnered with a number of financial institutions in Dubai, the company’s move to establish its presence in the region comes as no surprise.
As Rao detailed during the summit:
“We now have three banks in Saudi Arabia, two in Kuwait… one in Bahrain, one in Oman… a couple in the UAE [United Arab Emirates]… and it really is out fastest growing marketplace.”
As it stands, a number of Middle Eastern countries command some of the world’s largest volumes of remittances, based on statistics published by the World Bank. The region has so far been an extremely lucrative market among payment firms largely on account of its massive pool of foreign workers. As of 2016, there were over 10 million foreign workers in Saudi Arabia.
Prior to Ripple’s expansion announcement, the FinTech firm has also worked with several banks in Saudi Arabia back in September, among which includes the National Commercial Bank of Saudi Arabia which has also joined Ripple’s enterprise blockchain network, RippleNet, allowing it to connect to financial institutions across North America and Asia.
As a region dominated by the Muslim population, Rao underscored that Ripple’s blockchain solutions and services are in compliance with the region’s prevailing Sharia Law:
“Being able to know what are the underlying assets to a transaction…being able to identify the participants to a transaction…being able to be clear about the contractual roles and responsibilities and being able to reduce risks are all aligned with Sharia Principles.”
Discussing legacy money remittance services, Rao also noted that such services not only remains largely expensive but also equally laggard and inconvenient. As Rao cited as an example, banks including those in South Asia have been increasingly abandoning traditional systems such as the Society for Worldwide Interbank Financial Telecommunication (SWIFT), in favor of adopting alternative proprietary technologies.
However, Rao also underscored that such nascent technologies also have a number of disadvantages, as most are not specifically designed to facilitate high-volume payments with low value. As such, Ripple has been collaborating with financial institutions to come up with solutions that would both address such demands as well as meet financial regulators’ compliance requirements.