The central bank approved a pilot project creating a real-time remittance corridor.
The Philippine banking system is exploring the use of blockchain technology in an effort to speed up payment and remittance services.
The Bangko Sentral ng Pilipinas approved a pilot project that aims to create a real-time remittance corridor without the need for a central operator as the regulator attempts to leverage distributed ledger technologies (DLT) for traditional banking and wire transfers through partnerships with banks and DLT providers.
“We believe that collaboration and strengthening partnerships with other fintech players is a way to boost digital capabilities of correspondent banks,” BSP governor Nestor Espenilla Jr. told local media.
The Bankers Association of the Philippines is also creating its own program that will use digital IDs using blockchain, Espenilla added.
“The current thinking we are seeing now across the banks is that rather than merging with another bank and inherit problems, it might be a lot more cost efficient to rely on digitisation to scale up the business and grow a lot faster,” Simon Chen, senior analyst at Moody’s Investors Service told local media in a media briefing.
BSP believes that digital transactions are the most efficient way to get more Filipinos unto the mantle of the financial system as digitising payment processes could accelerate financial inclusion.
Only 22.4% of the country’s population or around 15.8 million Filipinos are in possession of a bank account, according to central bank data.
However, the tech-savvy millennial population can help jumpstart digitalisation efforts as a World Bank report notes that the share of Filipino adults who paid bills or bought products or services online hit 9.9% in 2017, whilst those who made or received digital payments in 2017 surged to 25.1% over the same period.
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