Ripple has announced a partnership with the National Commercial Bank of Saudi Arabia, the biggest bank in that country.
Road to Singapore
Under the terms of the deal, NCB will use RippleNet to connect to other financial institutions, facilitating a faster and more transparent international payment service for its customers.
It will begin its connections in Singapore, and then focus on companies in Asia and North America. This is notable because customers of the NCB did have access to these regions previously.
The NCB, also known as AlAhli Bank, was founded in 1953 and is based in the Saudi capital of Jeddah. According to the announcement, it has 400 branches in Saudi Arabia and more than 5.4 million customers worldwide.
Remittances, which is what Ripple systems are essentially designed to process, are big business in a country where foreign workers make up approximately 80 percent of the workforce and 30 percent of the total population.
The majority of them work in construction, live in squalor, and earn a pittance, but most are working to support families abroad so the remittance market is sizeable. Ripple cites figures of $37 billion exiting and $308 million entering Saudi Arabia in 2016 (World Bank data from November 2017). According to Trading Economics, $8.5 billion was sent abroad from Saudi Arabia in the first quarter of 2018.
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According to the Financial Times, foreign workers have been leaving the country in their hundreds of thousands because of a new tax on foreign labour imposed by Crown Prince Mohammad Bin Salman Al Saud. This is part of his modernisation drive; he wants to get native Saudis working. It should be noted that the country’s increasing unemployment rate indicates that the policy isn’t working very well. If this continues, he may have to renege on this plan, and if this happens the remittance market would grow again.
Exodus notwithstanding, foreign workers in Saudi Arabia numbered 10.2 million in the first quarter of 2018, out of a total population of approximately 33 million.
RippleNet is Ripple’s payment network, comprised of services like ‘xCurrent’ and ‘xRapid’. The list of institutions which have partnered with Ripple is too long to fully list. To give an example, in February 2018, institutions in India, Brazil, Canada, China and Singapore signed up to use Ripple products, as well as UAE Exchange, which at the time claimed to handle 6.75% of the $575 billion global remittance market. In May, the payment arm of one of the biggest cryptocurrency exchanges in South Korea joined the team too.
In terms of Saudi Arabia specifically, the country’s central bank tested xCurrent earlier this year in conjunction with the national financial regulation authority.
The cryptocurrency associated with Ripple services, XRP, has a market capitalisation of $11.1 billion according to coinmarketcap.com, making it third after Bitcoin and Ethereum.