The Chairman of the Union Bank of the Philippines claims blockchain could allow rural banks in the nation to offer a wider range of services. Justo Ortiz thinks that the emerging technology could boost lending, as well as increasing efficiency and transparency in the country’s ever-expanding remittance market.
According to a report in Bloomberg, Ortiz is optimistic about how blockchain technology could increase the services offered by the Philippine bank, particularly in rural areas of the nation. The bank has already been experimenting with the technology in relation to the ever-growing remittance market in the Philippines and aims to expand its efforts going forward.
The Philippines’ Remittance Industry
Many families in the country rely on money sent from relatives working overseas to make ends meet. Typically, remittance services are expensive and a lack of transparency in the system gives the worker living in a foreign country little control over who receives money and how it is eventually spent. The Union Bank Chairman stated that the use of a programmable token in the remittance system would allow those sending payments to have more of an impact on how their money is used once it reaches the Philippines.
The current inefficiencies in the remittance system also force families to rely on loans from local money-lenders who often levy heavy interest rates on payments. This makes the process of sending money home even more costly, denying vital resources to those who need them most.
More Efficient Options
Ortiz is hoping to expand Union Bank and Oversea-Chinese Banking Corp’s recently-piloted blockchain-based remittance service between the Philippines and Singapore. Describing a “national footprint” of more than 500 of the country’s rural banks, he claims that lenders would be able to expand their loan offerings because the increased transparency afforded by the blockchain system would mean they could allocate loans with greater confidence. Branches of Union Bank would also be able to offer additional services typically denied to those banking in more remote parts of the nation.
The Philippine remittance market is growing each year. In 2018, it rose by 3.1 percent, reaching almost $29 billion. The flow of funds is currently projected to grow by another three percent this year, with a decline in money sent from the Middle East being compensated for by a large increase in remittance payments from the US, Canada, Asia, and Europe.
What do you think about blockchain being used by banks to help with remittance payments? Would Filipino workers overseas be better off using a cryptocurrency instead? Let us know your thoughts in the comments below.