Digitizing Financial Services in PH with Blockchain

Digitizing Financial Services in PH with Blockchain

UnionBank partners with Microsoft to pursue blockchain technology in PH

Today, digital technology is pushing people, businesses, and governments to rethink the way they work and operate. In the banking and financial industry, fintech companies are disrupting conventional methodologies and introducing innovative products to cater to mobile and connected customers that demand state-of-the-art digital services.

Union Bank of the Philippines (UnionBank) is in the midst of a digital shift as it pursues a three-point plan. This aims to transform its operations with digital technology, put up a digital bank, and engage fintechs in catering to the local market.[1]

As part of its endeavours, UnionBank has partnered with Microsoft to conduct blockchain trials on Azure.

“Similar to our mission to empower every person and organization to achieve more, UnionBank is committed to making lives better and enriching the lives of Filipinos through greater financial inclusion. We stand together in the belief that financial service institutions need to ramp up digital transformation efforts to engage users and transform products,” said Hans Bayaborda, Managing Director and Country General Manager of Microsoft Philippines.

Blockchain for greater financial inclusion

A recent BSP survey found that 86 percent of Filipino households remain unbanked.[2] Blockchain can push for greater financial inclusion by allowing financial institutions to provide accessible, useful, and affordable products and services that meet client needs. Whether it’s transactions, payments, savings, credit, or insurance, these can be delivered in a responsible and sustainable way via blockchain.

Arvie de Vera, Head of Fintech at UnionBank, said: “Blockchain technology will revolutionize financial services, and more so in a context like the Philippines where financial inclusion is such a challenge.”

Blockchain is transformational technology that brings down the cost to serve the mass market. At its core, it is a form of data structure used to create a digital transaction ledger that, instead of resting with a single provider, is shared among a distributed network of computers.[3] This promotes financial inclusion by:

Modernizing legacy banking infrastructures. With blockchain technologies, banks can increase efficiencies by addressing the settlementk process across the board. Speeding payments, trading of all financial instruments, and automatically outputting regulatory information will massively disrupt the industry and shift labor into better customer service.

Securing transactions. Blockchain technology offers secure transactions through an encrypted ledger. This addresses cyber threats by establishing authenticity and tamper-proof record systems. The decentralization of the command systems in blockchains is critical to safeguarding cyber security.[4]

Azure – a secure blockchain platform

UnionBank is currently conducting and has had successful blockchain trials on Azure.

As an open, flexible, and scalable platform, Azure supports a rapidly growing number of distributed ledger technologies that address specific business and technical requirements for security, performance, and operational processes. Microsoft’s data and AI solution provides unique off-chain data-management and analysis capabilities not offered by others. The vast Microsoft partner ecosystem extends the capabilities of UnionBank’s platforms and services in unique ways that fit specific workload and industry needs.

Azure is secure and provides a rapid, low-cost, low-risk, and fail-fast system for organizations to collaborate on by enabling them to experiment with new business processes—all backed by a cloud platform with the largest compliance portfolio in the industry.[5]

“The Microsoft partnership has also been about sharing best practices and experiences. UnionBank is grateful to have the guidance of such a technology leader—one who has also undergone its own transformation,” de Vera said.

Revolutionizing PH banking

As a tech-savvy organization, UnionBank is embracing digital transformation through its strong culture of innovation and leadership. It is the first bank in the Philippines to pursue blockchain trials.

“It’s an exciting time. The arrival of blockchain in the Philippines is groundbreaking and can revolutionize the financial services industry and lead to greater financial inclusion in the country. As the first bank to pursue blockchain, UnionBank is making big strides in its digital transformation, and Microsoft is committed to helping them make Filipino lives better,” said Bayaborda.