SINGAPORE - Media OutReach - 23rd July 2019 - Union Bank of the Philippines(UnionBank) recently became the first Philippine bank to successfully pilotblockchain-based remittance from Singapore to the Philippines. This was done inpartnership with OCBC Bank, Singapore's longest established bank, using theAdhara liquidity management and international payments platform.
Amida continued push for financial inclusion for all Filipinos as aligned with the Philippinegovernment's mandate, UnionBank on June 27 used blockchain-based tokenized fiat to successfully remit from OCBCBank in Singapore to an account holder at Cantilan Bank, a rural bank inSurigao Del Sur. This was made possible by combining the features of both theAdhara platform and UnionBank-UBX's i2i platform.
According to Melchor Plabasan, Officer-In-Charge atthe Technology Risk and Innovation Supervision Department of the Bangko Sentralng Pilipinas (BSP), they anticipate greater adoption of blockchain anddistributed 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 supportinitiatives aimed at creating an enabling remittance environment for our overseasFilipinos. We look forward to exciting times ahead as we engage moremeaningfully for a modern, inclusive and progressive remittance landscape," hesaid.
Using blockchain technology forbank-to-bank cross-border remittance promotes financial inclusion, particularlyin underserved areas, as customers will see significant cost savings and nearreal-time transfers at the touch of a button. This is because blockchain'sadvantage lies in it being a distributed ledger where transaction records areaccurate, immutable and transparent allowing for atomic verification and subsequently,atomic settlements.
SopnenduMohanty, Chief FinTech Officer of the Monetary Authority of Singapore, said,"We started working with the financial industry in 2016 through Project Ubin toexplore the potential of blockchain technology for payments. We are excited tosee this potential being realized, with cross-border remittances that are nowcheaper, faster, and safer through the i2i network," he said.
"Thisproject will have deep economic and social impact for rural communities. We areparticularly thrilled as the Adhara team had worked on Phase 2 of Project Ubinin 2017, and has leveraged the learnings to bring this meaningful project tolife," he added.
For his part, UnionBank President &CEO Edwin Bautista said, "i2i, which is the blockchain platform and whichmade the Philippine side possible, is now managed and operated completely byUBX, the fintech subsidiary of UnionBank. Enabling this pilot is the creationand use of UnionBank's commercial bank-backed tokenized fiat called PHX, whichwill be officially launched very soon in the Philippines."
I2i is a blockchain-based platformconnecting rural banks to each other and to UnionBank. Thisprovides rural banks, which are currently financially excluded, access to valueadded services which can be ported through i2i, thus enabling a banking-as-a-serviceplatform. The i2i platform aims to bring millions of unbanked Filipinos to thefinancial system by connecting rural banks to the country's main financialnetwork through blockchain technology.
"With the pilot's use of i2i, ruralbanks can now receive direct-to-account remittances, and this is only thebeginning. With this connected platform, other value added services can now bemade accessible to rural banks," said Arvie de Vera, UnionBank Senior VicePresident and Head of the Fintech Business Group. "This empowers rural banksthat were once financially excluded, with access to universal bankingservices."
At present, Philippine rural banks havelimited access to financial networks, and remittances from overseas can take fiveto seven days to be credited to a beneficiary's account. The alternative forpeople residing in these areas is to use non-bank remittance counters, whichoften require in person transactions on the sending and receiving sides, andare subject to high fees.
"We are very excited to work with UnionBankand OCBC on this pilot, which demonstrates how tokenization and blockchain canmake international payments and liquidity management fast and efficient fordifferent market segments, providing competitive prices dynamically in realtime while fully complying with existing regulations and supervisoryrequirements," said Julio Faura, founder and CEO of Adhara.
Adhara's technology leveragestokenization of money and smart contracts on permissioned, enterprise-gradeEthereum networks to allow banks to submit, clear and settle payments in realtime with dynamic FX prices, and to efficiently manage their liquidity and FXrisk globally.
Furthermore, at the Singapore FintechFestival in November this year, UnionBank and OCBC will publicly demo thesystem with a remittance from Singapore to a Philippine rural bank via theAdhara and i2i platforms.
"This is truly a step towards achieving our purpose of elevating lives and fulfilling dreams byconnecting and enabling communities. Blockchain and emerging technologies makethis possible at scale by collaborating with institutions on thespot and promoting inclusion," added UnionBank Chairman Justo Ortiz, Ph.D.