The Philippine’s “Mother of all Banks” or the Bangko Sentral ng Pilipinas (BSP) and other commercial banks are currently exploring diffeent ways to use blockchain technology to fast-track payment and remittance services.
BSP Governor Nestor A. Espenilla, Jr. mentioned that the central bank has been studying in order to tap the platform being used by bitcoin and other digital currencies for traditional banking and wire transfers.
Accordingly, the BSP is working closely and hand-in-hand with the market innovators and industry players in exploring tie-ups of correspondent banks with DLT providers. Some strongly affirms that collaboration and strengthening linkages with other fintech players is a way in boosting digital capabilities of correspondent banks.
In order to grow markets in the midst of tough competition, new customer solutions through efficient operations should be timely delivered.
Technology-based solution providers are suggesting that blockchain could be efficiently harnessed to alleviate some correspondent banking issues. By enabling better risk management, reducing costs, and providing an alternative payment platform, this can be achieved especially when transferring small-value payments.
Although banks are somehow doubtful on using bitcoin and other virtual currencies, a number of players have since adopted the blockchain technology to make internal processes more efficient.
For now, Mr. Espenilla said the BSP already approved a pioneer project that would seek to create a real-time remittance corridor without using a central operator, to bypass the need for correspondent banks.
Blockchain consists of maintained digital ledgers of transactions in an ever-growing peer-to-peer network that safeguards itself the integrity of its records.
The Bankers Association of the Philippines is also creating its very own program that will use digital IDs using blockchain.
The central bank has been specifically upbeat in migrating to digital transactions, of which monetary authorities regard it as the most efficient way in getting more Filipinos aboard formal financial channels.
More than half of Filipinos own smartphones and have Internet access. Thus, the BSP believe that to achieve financial inclusion, digitizing payment and remittance transactions, would improve access while also trimming transaction costs