UnionBank and OCBC Pilots Blockchain Based Remittance from Singapore to the Philippinesby Fintechnews Singapore July 23, 2019
UnionBank of the Philippines recently became the first Philippine bank to successfully pilot blockchain-based remittance from Singapore to the Philippines.
This was done in partnership with OCBC Bank, Singapore, using the Adhara liquidity management and international payments platform.
Amid a continued push for financial inclusion for all Filipinos as aligned with the Philippine government’s mandate, UnionBank on June 27 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. This was made possible by combining the features of both the Adhara platform and UnionBank-UBX’s i2i platform.
According to Melchor Plabasan, Officer-In-Charge at the Technology Risk and Innovation Supervision Department of the Bangko Sentral ng Pilipinas (BSP), they anticipate greater adoption of blockchain and distributed ledger technologies 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. We look forward to exciting times ahead as we engage more meaningfully for a modern, inclusive and progressive remittance landscape,”
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. This is because blockchain’s advantage lies in it being a distributed ledger where transaction records are accurate, immutable and transparent allowing for atomic verification and subsequently, atomic settlements.
Sopnendu Mohanty, Chief FinTech Officer of the Monetary Authority of Singapore, said,
“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 realized, 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,”
For his part, UnionBank President & CEO Edwin Bautista said,
“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 tokenized fiat called PHX, which will be officially launched very soon in the Philippines.”
I2i is a blockchain-based platform connecting rural banks to each other and to UnionBank. This 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. The i2i platform 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.
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.
Adhara’s technology leverages tokenization 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.
Furthermore, at the Singapore Fintech Festival in November this year, UnionBank and OCBC will publicly demo the system with a remittance from Singapore to a Philippine rural bank via the Adhara and i2i platforms.
Featured image credit: UnionBank’s Facebook page