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Ripple’s CBDC Innovate 2023: Empowering African Diaspora: Ripple’s CBDC Platform Innovations – Futurum Tech Webcast

Ripple's CBDC Innovate 2023: Empowering African Diaspora: Ripple's CBDC Platform Innovations - Futurum Tech Webcast

In this Futurum Tech Webcast, host Steven Dickens interviews Parv Aggarwal on the Diaspora Bank Project, discussing integrating Ripple’s CBDC platform into the project’s initiatives. Aggarwal explains how they aim to connect the African diaspora with the continent, particularly through remittances. The project emphasizes the potential of CBDCs to streamline payments and enable investment vehicles for the diaspora, reducing the friction and high fees associated with traditional remittance methods. The discussion also covers how the project leverages the XRP ledger for efficient cross-border payments and financial inclusion, particularly in rural areas.

Their discussion covers:

  • How the Diaspora Bank Project aims to redirect remittance fees into investments in Africa.
  • How CBDCs provide a seamless payment rail and enable multi-platform functionalities.
  • How the project uses the XRP ledger for low-fee cross-border remittances and investments.
  • The focus on financial inclusion and economic development through the Diaspora Bank Project.

Learn more about Ripple on the company’s website and the Diaspora Bank Project entry on Devpost.

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Transcript:

Steven Dickens: Hello and welcome to another episode of the Futurum Tech Webcast. I’m your host, Steven Dickens. We’re here to talk about Ripple’s CBDC platform, and I’m joined by Parv Aggarwal from the Diaspora Bank Project. Hey, Parv, welcome to the show.

Parv Aggarwal: Hey, Steve, thanks so much. It’s a pleasure to be here.

Steven Dickens: So let’s get the listeners and viewers orientated. Tell us a little bit what you do on the Diaspora Bank Project.

Parv Aggarwal: Sure. So I’m right now Chair of the Technology and Innovation Committee at the African Chamber of Digital Commerce, and one of the initiatives of the African Chamber is to connect the African diaspora with the continent. So we’re doing that through a number of ways. Remittances are a large scope of their connection, but unfortunately right now about 10% of the $90 billion that African diaspora send back home is just wasted by third parties like Western Union and MoneyGram. So we’re trying to, instead of those fees being wasted, we’re trying to redirect those as form of investments that the diaspora can directly own assets and capacity building projects in their homeland.

Steven Dickens: So tell me a little bit, I mean, that obviously makes sense. There’s a lot of friction in that remittances process that’s costing everybody in that cycle money and causing, as I say, friction. Where do you see the role of CBDCs in that as being a platform to innovate?

Parv Aggarwal: Right. So CBDCs are both a seamless payment rail, but also they enable more multi-platform functionalities and more enterprise use cases of digital assets that wouldn’t be possible with just your crypto or your stable coins. So with CBDCs, you can now enable investment vehicles for the diaspora. You can now enable microfinance. You can now enable different use cases that even the CBDC pilots, like the eNaira pilot in Nigeria was having issues with. But if you now combine CBDCs with remittances, you unlock a lot greater possibilities.

Steven Dickens: It’s interesting what you mentioned there. I’m interested to understand a little bit more from an inclusion point of view and some of those cross-border payments that you talked about. So maybe let’s frame it so that we talk about both of those. The inclusion piece for me, crucial. How do we bring on the region and get more people banked and get more people access to these funds? And then the cross-border piece, obviously a lot of countries in Africa, but also that money coming in and out from around the world. So maybe if you can talk a little bit about inclusion and then a little bit about what you’re doing from a cross-border payments and remittances perspective, and how you leverage the XRP ledger and the CBDC platform from Ripple in order to do that.

Parv Aggarwal: We’re actually using remittances and cross-border payments as a vehicle for financial inclusion. So right now in the continent, most people actually have to find their nearest physical branch. Unlike in the west, most of the population lives in rural areas, so they have to walk tens of kilometers to find their nearest physical banks to be able to access their funds. So we’re working with the network of the Association of Micro Banks in Nigeria to enable people to access their remittance funds directly on mobile banking and be able to then use them locally. So offering an off ramp for their remittances. And in addition, we’ll allow microfinance pooled funds of funds that will be a portion of their remittances to serve as collateral for loans and enable greater access to microfinance.

Steven Dickens: So it’s fascinating there listening to you talk about that, that it’s both remittances and payments being leveraged to drive inclusion, which is fascinating. I’d saw them as two separate buckets. Interesting to hear how you are linking those. One of the things I’m really interested in is how the Diaspora project is using some of those native features, be that in the XRP ledger, be that in the CBDC platform, and specifically how you’re driving near naught percent fee flow for some of those cross-border remittances. If you could expand on that, that would be fantastic.

Parv Aggarwal: Sure, sure. So one of the great features of the XRP ledger is authorized trust lines, and in our case, we really use them for what in traditional finance is known as correspondent banking. So as a neobank, we will have a correspondent account with all central banks that have a live CBDC in circulation. So the idea is that when remittances are sent, we’ll have a liquidity pool of both stablecoins and CBDC. And with an authorized trust line, it only has to be enabled once to be able to allow seamless conversion between stablecoins and CBDCs. And once that’s done, that’s instantly settled. And Ripple is at the forefront of that, because Ripple led with RippleNet that a lot of commercial banks were using in place before.

So now you can have seamless conversion between CBDCs and stablecoins, and that allows final settlement, because that’s one of the key requirements of central banks is to have Forex settled before conversion to CBDC. And the other thing you can do is hooks, which allow a sort of parsing or split of your remittance or transaction. So this allows us to populate the investment wallet that we automatically allocate. So 5% of every remittance that sends, say, send $1000, $50 automatically is populated in your investment wallet, and Ripple’s native hooks allow us to do that.

Steven Dickens: Okay, fascinating. Particularly that investment wallet being able to apply an amount there in a percentage. So if you could describe some of the unique projects and opportunities that this Diaspora Bank Project and how that’s going to enable new feature function for your end users. I can see lots of sparks going here in my own mind, but want to understand a little bit about some of the opportunities that you see.

Parv Aggarwal: Sure. So the end users on our side are both in the diaspora and on the continent. So with our network of both the diaspora community and our local partnerships with central banks, with microfinance banks, with sovereign national investment vehicles, this enables a whole new level of not just financial inclusion, but an economic engine for the continent. So now this streamlines efficiency of development. So now the diaspora is directly owners of capacity building projects and of infrastructure that’s needed in their community.

So they’re going to have an investment marketplace where a member of the diaspora can choose, okay, if I’m really interested in connectivity, agricultural projects, more educational literacy, what have you, there’s specific projects that they can invest in and they have ownership of it. And of course, they have guaranteed returns that they will get after certain fixed periods. So really now you have an investment marketplace. You are enabling microfinance banks to be able to operate with greater transparency and efficiency, because now you have an investment marketplace, so they have to streamline their practices. And it’s all transparent for the diaspora community to see where their money is going.

Steven Dickens: So, Parv, this has been a fantastic conversation, particularly interesting for me that linkage between remittances and inclusion. Thank you so much for coming on the show.

Parv Aggarwal: It’s a pleasure, Steven. Thank you for allowing me the opportunity to share a bit about what we’re doing.

Steven Dickens: Yeah, really fascinating. You’ve been listening to the Futurum Tech Webcast. I’m your host, Steven Dickens. Please do all those things like click and subscribe and tell your friends. It helps with the algorithm. And we’ll see you on the next episode. Thank you very much for watching.

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Author Information

Regarded as a luminary at the intersection of technology and business transformation, Steven Dickens is the Vice President and Practice Leader for Hybrid Cloud, Infrastructure, and Operations at The Futurum Group. With a distinguished track record as a Forbes contributor and a ranking among the Top 10 Analysts by ARInsights, Steven's unique vantage point enables him to chart the nexus between emergent technologies and disruptive innovation, offering unparalleled insights for global enterprises.

Steven's expertise spans a broad spectrum of technologies that drive modern enterprises. Notable among these are open source, hybrid cloud, mission-critical infrastructure, cryptocurrencies, blockchain, and FinTech innovation. His work is foundational in aligning the strategic imperatives of C-suite executives with the practical needs of end users and technology practitioners, serving as a catalyst for optimizing the return on technology investments.

Over the years, Steven has been an integral part of industry behemoths including Broadcom, Hewlett Packard Enterprise (HPE), and IBM. His exceptional ability to pioneer multi-hundred-million-dollar products and to lead global sales teams with revenues in the same echelon has consistently demonstrated his capability for high-impact leadership.

Steven serves as a thought leader in various technology consortiums. He was a founding board member and former Chairperson of the Open Mainframe Project, under the aegis of the Linux Foundation. His role as a Board Advisor continues to shape the advocacy for open source implementations of mainframe technologies.

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