BASIC MODELS FOR BLOCKCHAIN P2P CROSS BOARDER MONEY REMITTANCE OPTIMISATION

Abstract

In the age of globalization, cross-border remittance industry is going to reach $25 billion by 2018 and today, almost all money remittance providers in the industry require a netting and clearance process at end of a transaction period (daily, hourly etc.) to reduce cost. In this way, majority of the money was never cross border and banks' high exchange rate and transaction fee can be cut out. However, netting cross border remittances is an inherently challenging task for many service providers. Cross border remittances usually come with di erent currency and timing; the volume is di cult to predict due to less traceable exchange rate uctuation. In addition, with the development of Blockchain technology, new business models are emerging which create new optimisation challenges. This paper thus developed basic optimization models to help remittance providers to decide the optimal cash reserve (which will be a ected by demand, supply) under two di erent business models, namely the traditional Franchised Service Model and the Blockchain Negotiated Service Model. This thesis also simulated the proposed models using the example of a Singapore-based p2p remittance company. The analysis of the two models was presented with the comparison of their pro tability to draw managerial insights.