Crypto, Blockchain to Spur Philippine Remittance Market

A study by data provider Ken Research has found that the increasing popularity of digital currencies is expected to revolutionize mobile financial services in the Philippines by using cryptocurrencies, biometrics and wearable technologies.

The findings were contained in the study titled, Philippines Money Transfer and Bill Payment Market Outlook to 2023, which predicted that the volume of remittances in the country would reach $42 billion by 2023. It added that the expansion of financial inclusion in the country, as well as the banked population,  is envisioned to offer opportunities for banks to raise their market penetration further moving forward.

“International remittance market in the Philippines will continue to be driven by increased migration of Filipinos to other countries,” the study said. “Unskilled workers and laborers will uphold their status as the largest deployed fraction of overseas workers and will continue to account for the largest share of aggregate remittances.”

According to the researchers, Ethereum blockchain could be used to lessen the cost of remittances. It explained Ethereum is not a cryptocurrency, unlike Bitcoin. Its native token Ether (ETH), was designated to operate as gas or transaction fee to fuel the network's decentralized applications.

It added that a majority of international remittances going to the Philippines is coursed through banks as it is the most convenient channel to remit money for overseas Filipino workers (OFWs). The banks like Banco de Oro, Bank of the Philippine Islands (BPI), Metrobank and others offer a significant number of reliable services for their overseas customers. Like the remittance service providers (MTOs), in the country, the banks have started offering cash pick up facilities across the country.

As of December 2017, a majority of the international remittance transactions were undertaken by the banking channels. Non-banking channels, which include MTOs and pawnshops, accounted for a low share in terms of transaction volume. Non-banking channels are well-known and highly used in the domestic remittance and for bill payment transactions in the country.

Last month, the country’s central bank, the Bangko Sentral ng Pilipinas (BSP) said it is partnering with commercial banks to look for ways to capitalize on blockchain to improve money transfer services and promote financial inclusion.

BSP governor Nestor Espenilla Jr. made the statement at the annual convention of the Philippine Correspondent Bank Officers (APCB) and added banks should utilize distributed ledger technology (DLT) for wire transfers and other traditional banking services.