Woori Bank is testing Ripple’s blockchain technology as part of its efforts to develop technologies for easier overseas remittances.
The private lender is partnering with several banks in Japan in a test of this technology and extended the trial period to Feb. 14 after an additional bank in Japan joined the experiment.
Ripple is a U.S. based startup and Woori said it has no plans to use a cryptocurrency selected by Ripple for the experiment.
Blockchain’s existence stems from software developers who see flaws in the current banking network. These flaws include significant wait times for payments to be settled, including multiday waits for cross-border transactions, as well as exorbitant transaction fees tied to banks that act as middlemen during transactions.
Woori said blockchain eliminates this middleman and constantly proofs transactions with the goal of settling payments within a few seconds or minutes, as opposed to days.
“Overseas remittances using Ripple’s blockchain technology are more cost-effective and time-efficient than using existing international remittances within the SWIFT network system,” an official at Woori said, adding the bank has continued testing systems for overseas remittances that will be operational within Ripple-owned blockchain technology.
“Woori plans to test a one-on-one money transfer with a bank in Japan. The bank wants to make sure the Ripple technology is stable enough to send Korean won to a bank in Japan and have the money converted into Japanese yen instantly, and vice versa,” the official said.
The transaction fees would come to a fraction of “a penny,” and the settlement of the entire transaction could be done within a matter of seconds.
“It’s too early to say whether the technology will be commercially available. The timing is dependent upon the developments of talks with our Japanese partners,” the official said. “Even if the test is done, it will take time for Woori to apply it to overseas remittances.”
Woori Bank expects it will take five to six months to come up with a policy decision, which will be based on the evaluation of the test results by related units.
Many local lenders are testing blockchain-based technologies in close collaboration with software engineers.
James Carlyle, chief engineer at blockchain software firm R3, was recently in Seoul to promote Corda, R3’s blockchain platform. The Bank of Korea, KEB Hana Bank and Shinhan Bank are R3 members.
“Woori is one of many local lenders which has keen interest in how blockchain technology works with its systems,” the official said.