- Shinhan Bank tests stablecoin remittance, addressing cross-border payment challenges.
- Collaboration with SCB TechX aims to revolutionize remittance using stablecoins.
- Pilot project leverages Hedera’s technology to eliminate intermediaries and reduce costs.
In a significant move towards financial innovation, South Korea’s Shinhan Bank has successfully conducted a feasibility test for stablecoin remittance payments. The bank utilized Hedera’s distributed ledger technology for this groundbreaking project. The primary objective was to address the persistent issues plaguing cross-border payments, such as exorbitant fees, extended settlement times, and a lack of tracking features.
Moreover, the pilot project saw the participation of several financial institutions. Notably, SCB TechX, the technology innovation business unit of Siam Commercial Bank, was a key participant. The collaboration aimed to leverage the benefits of stablecoins to revolutionize the remittance landscape.
Byunghee Kim, the blockchain lead at Shinhan Bank, emphasized the potential of stablecoins. He stated, “Stablecoins offer a low-cost, fast, and reliable way to transfer value across borders. Consequently, they can help increase financial inclusion and improve access to financial services for individuals and businesses in underserved communities.”
Significantly, the stablecoin remittance pilot is compatible with the Ethereum Virtual Machine (EVM). This compatibility is due to the use of Hedera’s smart contract capabilities. Hedera has stated that EVM-based stablecoin issuers will have the opportunity to participate in future pilots using the same tested framework.
Byunghee Kim further added, “With this next phase, we are pleased to have demonstrated how the use of Hedera’s EVM-compatible technology helps eliminate intermediaries, reduce costs, and speed up the remittance process.”
According to the World Bank, the average cost of remittances is 6%. However, cross-border transfers between countries with limited liquidity and network connections often incur high intermediary fees. Additionally, these transactions can take three to seven days to process, with no transaction visibility for customers.
Hence, the successful completion of this pilot project by Shinhan Bank marks a significant step towards addressing these issues. The use of stablecoins and distributed ledger technology could potentially revolutionize the remittance landscape, making it more efficient, cost-effective, and transparent. This development is a testament to the transformative power of blockchain technology in the financial sector.