UnionBank-IBM Blockchain Venture Seen to Revolutionize Trade Finance in Philippines
UnionBank of the Philippines has set its eyes on revolutionising the supply chain finance in the Philippines through its tie-up with tech giant IBM.
IBM Philippines chief technologist Lope Doromal Jr disclosed that UnionBank and IBM are working on a blockchain-based solution.
Doromal claimed the cloud-based application is one of the first projects of its kind in the Philippines outside of traditional banking, and is designed to transform trade finance transactions through a permissioned distributed ledger.
“Built on the IBM Blockchain Platform, the supply chain finance solution from UnionBank will be available to all their customers and partners who will join the blockchain network,” Doromal explained. “Once a part of the network, all parties involved in a transaction can act on the same shared ledger, with each party updating only their part of the process — ensuring efficiency, consistency, trust and transparency, while safeguarding sensitive information.”
Recognizing that invoice discounting — the process of bundling and selling invoices at a discount — is a major source of working capital finance for many suppliers, the solution was designed to enable more suppliers to access credit, with the goal of driving greater financial inclusion throughout the supply chain.
The latest solution is expected to improve invoice discounting process through the supply chain ecosystem by doing away with the practice of maintaining and manually updating separate ledgers that are not only slow but also prone to human errors which create inconsistent records resulting in delayed payments and release of capital thus increasing costs.
Doromal believes as UnionBank is able to access transactions recorded on a shared ledger in near real-time, the bank will be more able to develop and offer new products to small and mid-sized enterprises.
The tech executive noted that IBM is actively working with clients in the Philippines to understand which of their processes can leverage blockchain as a technology solution to eliminate friction, redundant steps and tasks while ensuring security and providing transparency to the partners who operate within a business ecosystem.
UnionBank’s leadership has lately been a staunch advocate of blockchain. Its chairman Justo Ortiz also heads the newly-established Philippine Blockchain Association (PBA). He recently led the launching of UnionBank’s blockchain initiative called Project i2i that aims to bring millions of unbanked Filipinos to the financial system by connecting rural banks to the country’s main financial network.
UnionBank last year also partnered with VISA to build a blockchain-based B2B payments system.