BANK TO HIKE MSME LENDING AS IT PURSUES BLOCKCHAIN
Malaya | 5 March 2018
TOKYO. -- Unionbank of the Philippines, one of the country’s more aggressive lenders, yesterday said it hopes to increase its lending for medium, small and micro enterprises as it increases its presence in the unbanked areas via a “digital shift.”
Speaking here at the Philippines-Japan Investment and Cryptocurrency Forum, Unionbank chairman Justo Ortiz said the bank intend to increase its portfolio mix for MSMEs to 33 percent of total from the current 15 percent.
“We want to crank it up. It’s an exciting sector, huge potential. And most are still underserved if not unserved,” Ortiz said.
Ortiz said the bank hopes to achieve this via a platform, to be launched in April, where it plans to connect 5,000 MSMEs.
“With the platform, MSMEs can sell, pay and be linked to other fintechs offering digital services,” Ortiz said.
Ortiz said Unionbank is now focused on linking rural banks to blockchain technology for easier transactions.
“Rural banks are on-site. They invested on communities. They are the best avenue to banking the unbanked. But they are unbanked themselves, cut off from the system. And they have to go to middle man. We can put rural banks to blockchain,” Ortiz said.
“There’s a lot of hope going forward to embracing this technology. Financial transactions underlie all commerce. So if there is more commerce, then clearly we will benefit from it,” Ortiz added.
“We feel there’s a lot of opportunity in rural areas. The growth rates of places outside advanced areas have been encouraging. But a trust factor is needed. How do we got these businesses work with each other? Enter Blockchain,” Ortiz said.
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.
Ortiz said Unionbank is in the midst of a digital shift as it pursues a three-point plan which aims to transform its operations with digital technology, put up a digital bank, and engage fintechs in catering to the local market.
Blockchain, according to experts who spoke in the forum, is a 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.
With blockchain technologies, banks can increase efficiencies by addressing the settlement 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.
As part of its endeavors, UnionBank has partnered with Microsoft to conduct blockchain trials on Azure.
Ramon Vicente 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.”
“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.
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