Japanese financial services providers have formed a consortium targeted at creating new types of payment and settlement platforms using Ripple.

SBI Holdings and SBI Ripple Asia Co. Ltd. have teamed up to establish a consortium that will develop new centralized domestic and foreign exchange services based on the blockchain technology.

The companies expect that the use of the distributed ledger technology will help to improve the existing payment and settlement services in Japan. The consortium plans to start using the blockchain technology in October 2016, while the testing stage will last till March 2017.

“Blockchain technology, representing innovative and key technology in FinTech, offers the potential for the user to build a system of higher flexibility and efficiency while improving the stability of financial institution systems,” the release said.

Named as ‘Consortium for Considering Using Blockchain Technology to Centrally Provide Domestic and Foreign Exchange Services’, the group will initially include such members as SBI Sumishin Net Bank, Ltd. and the Bank of Yokohama, Ltd. New members will join the consortium in the near future, with 30 new banks are planned to be added by March 2017.

“The Consortium’s member financial institutions will continue to discuss, both from technical and operational perspectives, how to utilize Ripple and talk about the duties that domestic and foreign exchange services should fulfill,” the release reads.

SBI Ripple Asia has been already investigating the potential of the blockchain technology before. Meantime, the Bank of Yokohama and SBI Sumishin Net Bank have been both developing fintech initiatives within the last few years.

Currently, Japan, along with the UK, is one of the best countries for bitcoin and blockchain companies, mostly because of its favorable regulatory environment. In March, the Japanese government issued a legislation recognizing digital currencies as money.  Meantime, the UK’s Financial Conduct Authority has recently unveiled that the technology has great potential and it will encourage the development of new blockchain-based applications for the financial sector.

Last week, Japanese online retail giant Rakuten announced it bought the intellectual property assets of bitcoin startup Bitnet. The firm is going to open a blockchain laboratory lab in the UK, using an acquired IP and several Bitnet employees.

By opening the new lab, Rakuten will begin exploring the blockchain’s potential to transform the way financial and e-commerce transactions are realized. The company first integrated bitcoin payments in 2015 and has always been interested in bitcoin and its underlying technology.

In general, the number of blockchain consortiums and partnerdshps has significantly increased over the past years. In 2015, we observed the launch of the R3CEV project, which already attracted over 40 members, including Barclays, Goldman Sachs, and UBS. Meanwhile, the Hyperledger initiative, launched the same year, can boast more than 60 members, such as J.P. Morgan, IBM, and Intel.

According to the recent report from the World Economic Forum, the distributed ledger technology will play a major role in reshaping the globe’s financial services industry, making it more efficient. Moreover, blockchain is one of the main emerging technologies that will dominate in the upcoming years, said Gartner report.

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