Union Bank of the Philippines (UnionBank) announced that it recently became the country’s first bank to successfully pilot a blockchain-based remittance from Singapore to the Philippines.
The bank partnered with Oversea-Chinese Banking Corporation, aka OCBC Bank, Singapore’s longest established bank, using the Adhara liquidity management and international payments platform.
With the initiative reflecting the Philippine government’s mandate to extend financial inclusion to all Filipinos, in late June UnionBank used blockchain-based tokenized fiat to successfully remit from OCBC Bank in Singapore to an account holder at Cantilan Bank, a rural bank in Surigao Del Sur located in the Caraga region in Mindanao. This was achieved by combining the features of both the Adhara platform and UnionBank-UBX’s i2i platform.
Melchor Plabasan, officer-in-charge at the technology risk and innovation supervision department of the Bangko Sentral ng Pilipinas (BSP), says that the central bank anticipates greater adoption of blockchain and distributed ledger technologies (DLTs) given their transformative potential, particularly in reducing unnecessary points of friction in payments and remittance.
“Rest assured that the BSP will continue to support initiatives aimed at creating an enabling remittance environment for our overseas Filipinos,” he added. “We look forward to exciting times ahead as we engage more meaningfully for a modern, inclusive and progressive remittance landscape.”
BSP believes that using blockchain technology for bank-to-bank cross-border remittance promotes financial inclusion, particularly in underserved areas, as customers will see significant cost savings and near real-time transfers at the touch of a button.
Sopnendu Mohanty, chief fintech officer of the Monetary Authority of Singapore (MAS), commented: “We started working with the financial industry in 2016 through Project Ubin to explore the potential of blockchain technology for payments. We are excited to see this potential being realised, with cross-border remittances that are now cheaper, faster, and safer through the i2i network.
“This project will have deep economic and social impact for rural communities. We are particularly thrilled as the Adhara team had worked on Phase 2 of Project Ubin in 2017 and has leveraged the learnings to bring this meaningful project to life.”
UnionBank’s president and CEO Edwin Bautista added: “i2i, which is the blockchain platform and which made the Philippine side possible, is now managed and operated completely by UBX, the fintech subsidiary of UnionBank. Enabling this pilot is the creation and use of UnionBank’s commercial bank-backed tokenised fiat called PHX, which will be officially launched very soon in the Philippines.”
UnionBank unveiled i2i, its blockchain-based platform for financial inclusion, in May 2018 to connect rural banks to each other and to UnionBank.
The platform provides rural banks, which are currently financially excluded, access to value added services which can be ported through i2i, thus enabling a banking-as-a-service platform. i2i aims to bring millions of unbanked Filipinos to the financial system by connecting rural banks to the country’s main financial network through blockchain technology.
“With the pilot’s use of i2i, rural banks can now receive direct-to-account remittances, and this is only the beginning,” said Arvie de Vera, UnionBank senior vice president and head of the fintech business group. “With this connected platform, other value-added services can now be made accessible to rural banks.
“This empowers rural banks that were once financially excluded, with access to universal banking services.”
At present, Philippine rural banks have limited access to financial networks, and remittances from overseas can take five to seven days to be credited to a beneficiary’s account. The alternative for people residing in these areas is to use non-bank remittance counters, which often require in person transactions on the sending and receiving sides and are subject to high fees.
“We are very excited to work with UnionBank and OCBC on this pilot, which demonstrates how tokenisation and blockchain can make international payments and liquidity management fast and efficient for different market segments, providing competitive prices dynamically in real time while fully complying with existing regulations and supervisory requirements,” said Julio Faura, founder and CEO of Adhara.
Adhara’s technology leverages tokenisation of money and smart contracts on permissioned, enterprise-grade Ethereum networks to allow banks to submit, clear and settle payments in real time with dynamic FX prices, and to efficiently manage their liquidity and FX risk globally.
It was also announced that at this year’s Singapore Fintech Festival on November 11-15, UnionBank and OCBC will publicly demo the system with a remittance from Singapore to a Philippine rural bank via the Adhara and i2i platforms.
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