Blockchain or bust: why business must embrace the technology of the future
One of the key measures of the Vision 2030 program of Saudi Arabia is a shift towards a digitized economy. Now the world's attention is turned to new and emerging blockchain technologies that are an integral part of supporting and implementing digital economies – and the Middle East is not far behind.
Recognizing these innovative solutions, Riyadh City Council has partnered with IBM to introduce blockchain technologies that will improve services and procedures across a range of administrative and economic areas.
The Saudi central bank, SAMA, has signed an agreement with Ripple to help Kingdom banks improve their payment infrastructure using xCurrent. This innovative pilot program is the first of its kind launched by a central bank. Participating banks will use xCurrent to immediately adjust payments sent in and out of the country, with greater transparency and lower costs.
SAMA's support for Saudi banks using blockchain technology has the potential to radically change the way banks in the country send money globally. Saudi Arabia now has access to all financial institutions (banks and payment service providers) on RippleNet, which will not only help modernize their payment systems, but will also increase their reach in the main corridors.
Bank customers will also benefit from faster, cheaper and more transparent cross-border transactions. SAMA will provide Saudi banks with the use of the program with management and training.
Agreements such as these will offer savings of around $ 200- $ 400 million a year across the system as the cost of remittances is about 60% lower than money transfers.
SAMA is the second central bank to support the use of blockchain technology to revolutionize payments following the success of Bank of England tests with Ripple in 2017.
Central banks around the world are realizing that blockchain technology can transform cross-border payments, resulting in lower barriers to trade and commerce for both businesses and consumers. Meanwhile, SAMA has announced that Saudi Arabia will develop its national cryptocurrency through a collaborative effort with the United Arab Emirates.
State-supported cryptocurrencies will enable countries to adopt the latest financial technologies, resulting in faster, more cost-effective cross-border payments. Digital currencies will be used primarily for bank-to-bank transactions.
Blockchain is a futuristic technology that is here to stay. Saudi Vision 2030 is revolutionary and digital transformation is one of its main pillars. With its integrated security, transparency and efficiency, blockchain is the best option for digital transformation.
Companies that do not implement blockchain risk become obsolete. With digital banking and expansion-based blockchain solutions for fintech, traditional banks may soon find themselves back.
Basil M.K. Al-Ghalayini is the president and CEO of BMG Financial Group.
Disclaimer: the opinions expressed by the authors in this section are proper and do not necessarily reflect the point of view of Arab News