Japan’s Mitsubishi Corp & Financial Group To Build International Money Transfer Network Using Ripple’s Distributed Ledger Tech

Mitsubishi Corp and Mitsubishi UFJ Financial Group are the latest major financial institutions to announce they will be launching an international money transfer system built on the blockchain. Specifically, the firms will be using the distributed ledger technology developed by California based Ripple, which has also been trialled by the likes of Western Union, MoneyGram, the Saudi Central Bank, and China’s Lian Lian bank.

Mitsubishi says that using distributed ledger tech will enable them to complete international money transfers between two parties in a matter of minutes, as opposed to a matter of days, which is currently how long transactions can take using a network of international “correspondent” banks, with each one taking time to process the transaction, and charging a fee, making the overall process both slow, and expensive.

As well as significantly speeding up the process of sending money overseas, blockchain technology also increases transparency for both sender and receiver, who will be able to use the decentralised ledger to check the progress of transactions in real time, Mitsubishi says. The company plans to begin an operational trial before the end of this month, but has suggested that full implementation of the system is not expected for several years.

Mitsubishi also says that it plans to make distributed ledger technology available for individual customers’ money transfers,  and has announced the first scheduled trial transfer, which will occur when an affiliate branch of MUFG, based in Thailand; the bank of Ayudhya; will make a transfer to another affiliate, based at a Singapore branch of British banking giant Standard Chartered.

By using Ripple, Mitsubishi says that it can reduce costs by up to 30%, and increase transaction times from days to minutes, thanks to Ripple’s ability to bypass correspondent banks.


Interestingly, however, Mitsubishi has rejected the idea, proposed by several other major banks and fintech disruptors, of using bitcoin to facilitate international money transfers. The bank blames the cryptocurrency’s volatility, claiming in a press release that it is “not thought to be suitable for intercompany payments, which can involve transfers of large amounts of money”, as well as the fact that many countries, most notably China, are not getting on board with bitcoin and discouraging, possibly even outlawing, its use.

Mitsubishi says that it completes tens of thousands of international money transfers every month and that the new Ripple based system “will work favourably for companies to promote overseas business strategies.”

The Money Cloud View

Whoever wins the battle to build the most trusted and transparent infrastructure, avoiding correspondent bank fees, and speeding up transaction times, will become the favoured choice of most money transfer operators (MTOs). Currently, the major players appear to be SWIFT, the financial messaging system which has been active since the 1970’s but has shown an impressive ability to modernise through systems such as Swift gpi, used by celebrated fintech Singapore based DBS, and distributed ledger tech providers such as Ripple, R3, or even bitcoin itself, if the cryptocurrency can solve its volatility issues.

The competition between systems should ultimately benefit the customer. As ever, using a money transfer comparison site like The Money Cloud to guarantee you are getting a competitive deal, from a trusted provider, is advisable.