PHL urged to use fintech to lower remittance costs

THE PHILIPPINES must take steps to make remittances more efficient, even as financial technology has improved in the country, money transfer solutions company Ripple said.

“It is not advanced. It doesn’t take advantage of the technologies,” Eric van Miltenburg, Senior Vice-President of Global Operations at Ripple, said in a phone interview.

Mr. Miltenburg noted the slow transfer time of remittances from one country to the Philippines and the costs related to these transactions.

“It’s taking several days, the costs are significant,” Mr. Miltenburg said, noting that remittances in the country would cost around 7% of every $200 sent. “That system is very broken. Leverage your technology and provide alternative technology, banks and non-banks.”

He however noted that the country is capable of making such improvements given the increasing number of financial institutions offering technology services for remittances, citing Cebuana Lhuillier as one of its partners here in the country.

He added that Ripple is also working with a local bank, but stopped short of disclosing details.

“We’re seeing a significant demand in ASEAN and the Philippines... Over time, we will see more,” he said.

Mr. Miltenburg said he appreciates the Bangko Sentral ng Pilipinas (BSP) for its ”progressive thinking” on fintech and hopes to engage more with regulators both in the Philippines and in different parts of the globe.

He noted that it is important that the government understands the importance of financial technology, especially as remittances provide a boost to household consumption, which is around 10% of the country’s gross domestic product (GDP).

“It is not the technology that is the challenge but how we use it. The Philippines is one of the countries where the regulators are fast-forward. We’re optimistic,” Mr. Miltenburg said, noting that financial technology in the country “is in the process of being upgraded.”

“The pace of growth in the Philippines will continue... We will double the size of our office and that’s reflective of the demand and activity in the region,” he said.

CRYPTOCURRENCY

Meanwhile, Mr. Miltenburg said there is a need to use blockchain technology, specially cryptocurrencies, to facilitate faster remittances between countries.

Currently, Ripple uses XRP, a type of cryptocurrency which the company claims to be cost-efficient for cross-border transactions.

Asked if the use of cryptocurrencies would not put overseas Filipino workers and their remittance recipients at risk of losing the money due to volatility, Mr. Miltenburg said there will be minimal risk since it only takes seconds to complete the transaction.

“Volatility exists across all the coins. The volatility is relatively modest. XRP to peso, the amount of exposure is seconds, very minimal. Much more volatility in PHP to USD in three days than XRP,” Mr. Miltenburg said.

“We’re quite bullish on how cryptocurrency can play a great role here,” he said.