UNIONBANK OF THE PHILIPPINES, INC. Piloted its cross-border remittance service for local rural banks through Blockchain, as it aims to push financial inclusion into rural areas.
In a statement yesterday, the Aboitiz Bank said it successfully transferred Tokenized Fiat from the OCBC Bank in Singapore to a contingent in Cantilan Bank, a Sigaa del Sur based rural lender by UnionBank's blockchain platform Y2.
The fund is remitted with the Adhara liquidity management and international payments platform.
"Using blockchain technology for bank-to-bank cross-border remittance promotes financial inclusion, particularly in underwater areas, as customers will see significant cost savings and live real-time transfers on the touch of a button," UnionBank said in the Explanation.
i2i is a blockchain-based platform that connects rural banks to each other and to UnionBank, providing small lenders access to wordpress services that can be crawled by the system. I2i was launched in 2018, now handled by UBX, UnionBank's financial technology arm.
Blockchain is a distributed data directory that involves a large network of entities where data is stored in "blocks." The storage units are continuously updated and secured with cryptography, making data management and data-driven processes decentralized, tamper-proof and more transparent.
"With the use of the 2nd of the pilot, rural banks can now receive direct-to-account remittances, which is only the beginning," said UnionBank Senior Vice President and Chief of the Fintech Business Group Ramon Vicente V. De Vera II said. "It empowers rural banks that were once financially excluded, with access to universal banking services."
Meanwhile, rural banks have limited access to financial networks and clearing systems, with remittances from abroad taking days before being credited to onshore accounts. Alternatively, Filipinos rely on non-bank remittance counters who need to remit the money physically and are subject to high fees.
"Blockchain and emerging technologies make it possible to balance by collaborating with institutions on the ground and promoting inclusion," said UnionBank Chairman Justo A. Ortiz.
The Bangko Central ng Pilipinas (BSP) is looking to raise its share of E-payments to 20% of all Philippines transactions by 2020, from a 1% share back in 2013.
BSP Deputy Director Melchior T. Plasban said that the monetary authority anticipates "greater adoption of Blochshain and distributed ledger technologies" given their potential to reduce unnecessary friction and remittance points. – K.A.N. Vidal