Potential implications of HDFC joining RippleNet

Brief on Ripple and XRP

Ripple is a company that enables cross border payments and remittances. RippleNet is a payments network they provide which is based on blockchain. A much highlighted and valuable feature is on demand liquidity. 

Large banks would traditionally rely on, what are called, nostro accounts to hold foreign currencies as this helps mitigate currency price fluctuations during international transactions. Smaller banks typically depend on larger banks to provide them with this liquidity in lieu of high fees, which are eventually borne by the end customer.

Ripple's XRapid is designed specifically for the smaller and medium sized banks and uses XRP as, what is called, a bridge currency. This can help reduce between 40-70% transaction costs, and also massively decreases the time per transaction from days to seconds.

Another Ripple product, though not tied to XRP, is xCurrent, which provides a systems that is secure and reliable. It offers out of the box interoperability between banking and payments systems.

HDFC joins RippleNet

While HDFC currently seems to be primarily interested in testing out xCurrent ¹, there is some hope with more and more Indian banks, including IndusInd, Kotak Mahindra, Yes Bank and Axis Bank, becoming interested in using Ripple's technology for international payments and remittances. If Ripple is able to consistently delivery value, banks may see enough incentive use test XRapid to solve the long standing problem of high transaction costs for their growing customer base, interested in international transactions.

Since Ripple owns 60% of XRP, any increase in its demand through RippleNet would have impact of demand for XRP in general. It is also among the crypto currency technologies under active development with more application areas being explored. These factors make it an interesting investment opportunity.

To evaluate trading opportunities in the short and near term, head on over to FinHawk to do an assisted technical analysis yourself.

Sources

1. https://www.indianweb2.com/2020/09/hdfc-bank-joins-ripples-payment-network.html