Japanese regional lender Tohoku Bank has teamed up with SBI Remit to overhaul its international money transfer services.
The collaboration, which officially launched on Wednesday, comes as many traditional domestic financial institutions in Japan scale back or entirely shut down their foreign exchange remittance services.
Eschewing regulatory headwinds
Domestic banks are currently in the process of retreating from international transfers due to the increasing administrative burden and resource constraints.
This is mainly driven by compliance costs and system upgrades.
Tohoku Bank has signed an agreement to funnel its remittance demand to SBI Remit to make sure that its customers still have access to global payment rails.
Notably, SBI Remit has been using Ripple’s distributed ledger technology (RippleNet) to facilitate cross-border payments for almost a decade.
The firm was also a trailblazer when it came to the $XRP token for international remittance solutions in Japan. It rolled out its first $XRP-powered corridor in July 2021.
A demographic change
Japan’s Iwate Prefecture, where Tohoku Bank is headquartered, is currently dealing with rather severe domestic labor shortages. The region has grown increasingly reliant on foreign talent to support local industries.
Over the past decade, the foreign resident population has doubled across many local municipalities.
Notably, it has surged by 3.6 times in the corporate hub of Kitakami City alone.
The ability to reliably send wages back to home countries has become a critical regional issue.
The tie-up makes it possible for regional customers to bypass the delays of traditional correspondent banking. Users can initiate transfer requests 24/7 via a smartphone app. The service supports multiple settlement methods across 200 countries, including direct bank deposits, physical cash pickup, and so on.
