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faisalkhan last won the day on December 19 2016

faisalkhan had the most liked content!


About faisalkhan

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    Banking & Payments Consultant | X-Border Money Transfer Specialist | FinTech Podcast Co-Host | Fintech Scout for VCs | Quora Top Writer
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    Banking & Payments Consultant
  1. faisalkhan

    Xcurrent and XRP

    Regulations will naturally have a role in the theater. However, I feel most banks are 100s of other projects that might be a priority over the implementation of XRapid. In addition to this, the tech involved, and getting it tested, audited, to go into production has a larger time consideration. Not to mention, pressure from SWIFT and other companies, so I think banks are going to go easy on this one. The key factor (in my opinion) is market. If a particular bank services 4-5 corridors and makes its money through that. It will be quite content if XCurrent is working amongst its correspondent banks. Implementing real-time settlements is a much greater improvement. Truth be told, in some cases, they don't want to settle early, the float is still an essential income generator.
  2. I agree, Ripple is going to be tough to beat, but then again, the existing players won't let go of the field, just because ripple looks 'good'. ACH is vying for something on its own. So is SWIFT and a few banks who think they have it right. I wouldn't be surprised if VISA/Mastercard hedged their bets all across with a wait-and-see approach. Dwolla (read here: https://www.dwolla.com/updates/dwolla-faster-payments-proposal-download/) is vying for its Fisync is something to watch out. It will eventually be all about what the big boys decide to use and then a couple of smaller payment systems - just to make the playing field look level.
  3. faisalkhan

    Alibaba, MoneyGram and Ripple

    For Ant to expand worldwide, they are on a constant buying spree. You can read about their recent acquisitions/investments in this article: https://techcrunch.com/2017/02/20/ant-financial-mynt/. Every wallet operator is recognizing that the digital money fever is not spreading as fast as the pundits had hoped for within the unbanked and lower class earners. Much of the world's transfers are done by walk-in clients at physical locations. This is one reason PayPal acquired TIO Networks. Take the following statistic for example, and this is compiled using my own data sets. Of the money transfer to Latin America (including Mexico), from USA is based on the following breakdown: 84% is based on walk-in clients at physical agent locations. 6% is done online via non-banking financial institutions, i.e. WorldRemit, TransferWise, etc. 10% is done by banking institutions (FIs), i.e. transferring money from my Bank of America account and using my bank's international wire transfer to send the money. The physical, walk-in client market is YUUUGEEE!!! (as Bernie would say!). The world's unbanked number hover at the 2.0 Billion mark. Do you see them moving from zero banking to PayPal and smart apps, or some zero banking, to some very basic method of storing and transferring value (akin to MPesa)? This is precisely a reason why Ant Financial wants to acquire MoneyGram. The existing base is HUGE! Access to 200+ countries and territories, licenses, running system, millions of customers and all for what? less than US$ 2 Billion???? this is a steal. What did they buy a zero revenue company like WhatsApp for? 2 Billion is the digital equivalent of pocket change. I wrote an article on this recently: MoneyGram! Who Will Buy It? All and all, it is about expanding reach, covering all market segments, have installed, running plumbing if you will.
  4. faisalkhan

    Alibaba, MoneyGram and Ripple

    Here are my thoughts on the MoneyGram + Ant Financial buy out. It is no hidden secret that MoneyGram was performing poorly (financially speaking). Their stock price dipped, and almost went under $1 so that the shares had to be grouped together in order to avoid getting delisted from NASDAQ (look up MoneyGram Reverse Stock Split). Every 8 shares of MG were converted to 1. This happened in November 2011. Despite that, the trend has been a downward trend. AliPay has applied for Money Transmitter Licenses in the US, AliPay which is owned by Ant Financial. MoneyGram already has licenses in US and various other countries. This is a HUGE advantage for Ant Financial (aka AliPay). Someone mentioned that MG is the central FX provider, it is not. MG obtains its liquidity and FX from various partner banks and open-market treasury providers. Peter Ohser’s viewpoint is the Bitcoin as the last-mile rails is that he believe (and rightly so), that last mile bitcoin adoption is just not going to happen. I have visited many many money transfer locations around the world, interviewed many people and I just don’t see bitcoin being adopted by those walk-in customers (too many reasons to list here). Peter's a good friend and I had the opportunity to interview him for our podcast (http://www.aroundthecoin.com/). You can listen to the interview here: With regards to bitcoin on the back-end rails of MG, again, not going to happen, since MG prefunds many many countries. Will MG use Ripple or other DLT for quicker settlement? No doubt about it! It will happen. Whether it is Ripple or someone else, all depends which corridors MGI deems needs quicker settlement process and by which it can increase efficiency of its Dollars floating around. I think MG will first see which of its partners are going to adopt DLT and see how that works. If it presents a good business case (and I have every reason to believe it will), then MG will slowly induct it into their financial network, whether that is Ripple or someone else. As much as other would hate to agree, I don’t see a role of XRP in this.
  5. In so far as I can tell. You cannot. Unless we all believe that XRP behaves like Bitcoin and there are currency pairs for it, XRP/USD, XRP/GBP and banks have bought massive amounts of XRP - which doesn't make sense.
  6. I'll make a diagram and post it here...
  7. By OCC/FDIC (if you're a State licensed Bank) and the Federal Reserve, those who are allowed to do/offer correspondent banking.
  8. To understand the confusion, you have to understand what types of Nostro Accounts exist. First let’s talk about the Central Bank and the Nostro Accounts they hold. Say the Bank of Bangladesh (the CB for BD), has US$ 1 Billion in Foreign Exchange Reserves, this money is not actually in Bangladesh. Since the US Dollar is controlled by the United States, i.e. the Federal Reserve, the Bank of Bangladesh maintains a Nostro Account with one of the designated Correspondent Banks, example JP Morgan Chase. So the entire foreign-exchange reserves of Bangladesh are actually sitting within a Nostro Account with JPMC. JP Morgan Chase then has this corresponding ledger entry with the Federal Reserve of NY in their register. Keep that thought there, will come back to it in a bit. Now us first talk about regular Nostro Account. In the example below will start with the US Dollars again. A commercial bank in UAE, say NBAD (National Bank of Abu Dhabi) (not the central bank) that has correspondent banking relations in the US, would have its Nostro account with a bank in NY, say BNY Mellon. This means that the US Dollar that NBAD holds is with BNY Mellon and in turn with the Fed NY. Now imagine another bank, Habib Bank from Pakistan, which has its correspondent bank in NY as Citi is where its US Dollars are parked and in turn with the Fed NY. Now when a client of NBAD has to pay US$ 10,000 to a client of Habib Bank, the ledgers of NBAD / BNY Mellon / Fed NY have to be adjusted. Then another adjustment is done for Fed NY / Citi / HBL - for the transfer to be successful. (This is all assuming same currency). This is a slow process. Add to this mix, the Foreign Exchange Component, if the Buyer in UAE had to pay US$ 10,000 equivalent in AED, and the Seller in Pakistan had to receive money in PKR, you have to find liquidity providers on both end (the PKR side is easy), but on AED side you would now have to either source it from someone who has US Dollars and will trade it for the AED and then carry out a transaction. If you have a liquidity provider, they would need to have a Nostro Account in UAE to accept payments in AED and then would probably have a Nostro account in US to deliver the USD to NBAD. This is where Ripple’s XRP and the Ripple network can shine. The XRP is the traded currency of choice and can be paired up with any currency for conversion. The need to go to specific Nostro accounts and find a path from Buyer to Seller is diminished when liquidity providers who are in the same network can also benefit. There is no saying that the liquidity providers have to independent organizations, they can be bank. Banks can hold on to XRP and not block their actual currencies. Rather than maintaining Nostro accounts in multiple banks and your trading partners are doing the same, you can hold on to your wealth in XRP and then use the XRP/USD or XRP/AED or XRP/PKR price tables and trade. Granted this sound utopian, but it can be done. My personal problem with this is, I don’t see banks willing to commit to XRP. DLT based clearing is fine, but holding on to XRP puts another spin on the equation - of which personally I am not 100$ clear about. It may be due to my limited understanding of it all. On the Central Bank example, this becomes a problem, because if the XRP is subjected to price fluctuations, no central bank / government is going to accept XRP as reserves in order to eliminate the Nostro accounts. I cannot see the Nostro account disappearing in this case. I can see the Ripple network where a consortium of banks are doing essentially real-time inter bank clearing, hence the need to park money in a Nostro account disappears, however, I am not convinced the same can be said about Central Bank and their Nostro Accounts. From a government point of view, I don’t think currency issuers will settle for XRP as a trade-able commodity. Respective governments like direct ledger positions that they each hold with each other’s banks.
  9. I'm still trying to understand what he is saying, and how it will pan out. Not a techie, but still trying to understand the commercial or general use case as he is suggesting. Need to watch this video again and again.
  10. faisalkhan


    FedWire was made to move funds within the Federal Reserve System. It works perfect for them as an RTGS clearing mechanism, in the time slots they work in. Granted there is exposure when they are not settling, but that is something they have lived with very nicely for many, many years. Banks are not reluctant to use the RCL, they are in a phase and place where they see plenty of options and opportunities themselves. Also, I don't think *IF* Ripple were to become the centralized clearing mechanism for all US banks, that any conversion to any other dollars would be performed. It would be a mono-currency ledger and a private one at that. For Ripple to compete with FedWire, their RTGS solution needs to be accepted and implemented by the Fed/US-Banking system on the whole. It is about adoption and not necessarily technology here.
  11. Physical cash is moved quite often. Other than the fact that it is also very profitable for the central banks (look up: seigniorage), cash sale/movement by banks is quite common. For example tourists in UAE surrender their US Dollars for example to buy local Dirhams for shopping, etc. The US Dollars collected by money exchange companies is then exchanged for an equivalent electronic deposit. The currency then may snake its way across to a dealer of US Dollars in Kenya or Nigeria or Hong Kong. There is a HUGE market that revolves around the issuance of cash in markets where it is needed and collecting it, etc.
  12. Thank you. Great video! Explains it all very nicely.
  13. Sorry if I wan't clear, all of them nearly use SWIFT.
  14. For those wishing to know about the readiness (and willingness) of implementing blockchain based technology solutions for faster payments, etc. Here is some pertinent information you might find handy. The cities which were covered were: Amsterdam, Brussels, Paris, Lisbon, Copenhagen, Stockholm, Oslo, Munich, Berlin, Prague, Salzburg, Zurich, Istanbul, Dubai and Abu Dhabi. The takeaway summary points that can be shared are as follows (keeping the focus on Ripple as this is the unofficial forum for it): Banks in Europe, Turkey and UAE are cognizant of the solution providers (including Ripple). Ripple is in active discussion with a lot of banks. Bankers have either attended a session or a presentation on Ripple or have had a meeting with Ripple to become more aware of the solution offering. Did not come across a single bank that had not heard of Ripple. Which was a surprise. Correspondent Banking still remains the Damocles sword for many, especially US Dollar Clearing with US based Correspondent Banks. Everyone wants to know if there is a direct method to clear US Dollar payments amongst two banks without going through the US Correspondent Banks. The deflated answer is, at present there is none. Banks don’t like it / don’t get the XRP Liquidity providers / Market Makers is a huge Question Mark (?) for them. Lots of questions around it and very honestly, I was not the best person to answer them. Am still learning that aspect. Blockchain is uttered more than say Ripple or R3 or Hyperledger. It is always Blockchain this, Blockchain that. There were a lot of questions with respect to information sharing, how the transaction data, particularly with respect to KYC data, end-client data is shared? Who gets to see it? etc. SWIFT MT is the preferred method for banks to get on board, as they see their partner banks having SWIFT, so an easy solution/on-board process for member banks would be SWIFT (I’m sure this had been thought of by Ripple, however, again, I was not the right person to answer it, nor did I have the domain knowledge to comment on it). Is everyone itching to use some Blockchain technology? You bet! Skeptics within the banks? You bet! Proponents more than Opponents? For sure! The banks that I spoke to I would say slightly less than a 1/3rd of them were ready to undertake some form of implementation / project initiation in 2017. Had these banks highlighted a problem area that Blockchain / Ripple / Etc. could solve for them? Yes!!!! (emphasis supplied). I did not visit Tier I banks in Europe (just so we are clear). I did visit Tier I banks in Turkey and UAE. Central Banks of the various countries (I could only meet up with 4 of them) were equally aware of it and in many ways were cautiously optimistic about the whole blockchain environment. All in all it was a wonderful (albeit extremely hectic/tiring) trip. Be happy to answer questions (however, please respect that this was a paid consulting assignment, so certain questions I might have to decline).
  15. Just got back this weekend. 44 days on the road. Need one week's of rest and will resume here!