- Fubon Bank collaborates with Ripple for real estate tokenization initiative.
- Blockchain could save $10B in cross-border payments by 2030.
Fubon Bank, a Hong Kong-based financial institution, has announced its collaboration with Ripple, a US fintech company, to launch a real estate tokenization initiative. Scheduled for the third quarter, this project aims to harness blockchain technology’s and digital currencies’ benefits to enhance efficiency in property transactions and lending procedures.
The report states that Fubon Bank will utilize the Ripple Central Bank Digital Currency (CBDC) platform in the pilot project to tokenize properties. This will enable the issuance of loans using digital Hong Kong dollars. By integrating blockchain technology, the process of property transactions will be made more secure, transparent, and efficient while also speeding up loan issuance using digital Hong Kong dollars.
During the testing phase, Fubon Bank will prioritize its existing customers eligible for additional mortgage loans. In partnership with Ripple, the bank will tokenize the collateral and provide eHKD loans to these customers, using a 1:1 exchange rate between Hong Kong dollars and the test digital currency.
Through Fubon’s dedicated eHKD electronic wallet, customers will have access to comprehensive loan information and relevant data in real-time. This includes details like loan-to-value ratios, stress tests, and property values.
Ripple and Fubon Bank to Showcase Real Estate Asset Tokenization Use Case as part of the Hong Kong Monetary Authority’s Inaugural e-HKD Pilot Programme https://t.co/t22G3cP5M2
— 北尾吉孝 (@yoshitaka_kitao) May 22, 2023
The pilot program does not involve issuing digital Hong Kong dollars. Instead, Fubon Bank will maintain its existing mortgage loan services for customers who wish to apply for larger mortgages after the trial.
Ripple’s Extensive Experience in Similar Technologies
The Fubon Bank executive highlighted Ripple’s extensive experience developing similar technologies across various countries and regions.
Xu Luosheng acknowledged the advanced state of Hong Kong’s payment ecosystem, citing established platforms like FPS and Octopus. He proposed initiating loans as the primary practical application of the digital Hong Kong dollar to encourage widespread adoption.
Customers can use digital Hong Kong dollar loans for diverse purposes, such as buying a house or making investments, thereby promoting the currency’s usage.
Ripple’s CBDC director, Ross Edwards, mentioned that their approach employs technology akin to XRP Ledger (XRPL) to integrate the theoretical digital Hong Kong dollar with tokenized real estate and financial lending agreements.
Ripple is actively collaborating with national central banks and participating in regional CBDC projects. In Bhutan, Ripple is currently testing retail, cross-border, and wholesale payment use cases for digital currencies. Simultaneously, Ripple is aiding the government of Palau in creating a national stablecoin backed by the US dollar.
Projected Savings in Cross-Border Payments by 2030
A recent report, co-authored by the digital payments network Ripple and the United States Faster Payments Council (FPC), suggests that blockchain technology could lead to potential savings of around $10 billion for financial institutions in cross-border payment expenses by 2030. The report, published on July 29, surveyed 300 finance professionals across 45 countries representing sectors such as fintech, banking, media, consumer technology, and retail.
The survey involved a diverse group of participants, including analysts, directors, and CEOs, and an overwhelming 97% of them expressed strong confidence in the vital role of blockchain technology in expediting payment systems within the next three years.
Additionally, more than half of the participants concurred that the most significant advantage of cryptocurrencies lies in their potential to reduce costs. With the continuous growth of the e-commerce industry and businesses focusing on global markets, cross-border payments are projected to increase significantly in the upcoming years. The report emphasizes an expected substantial rise in international payment transactions by 2030.
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