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Philippines' first blockchain-enabled platform for MSMEs

Publish date: 23 July 2019
Author: Ping An Group

OneConnect, an associate company of China's insurance giant and Fortune Top 29 Company Ping An Group, has partnered with UBX Philippines Corporation, the wholly-owned fintech subsidiary of Union Bank of the Philippines, to build the country's first blockchain-enabled platform to meet the banking needs of micro, small and medium enterprises (MSMEs).

The partnership underpins both UBX and OneConnect's commitment in accelerating digital transformation in the Philippine financial services industry -  using their technological advancements to enable financial institutions to better serve the unbanked and underbanked communities.

The partnership comes amidst the vital roles of MSMEs in the Philippine economy. According to the Philippine Statistics Authority (PSA), 99.6% of all business in the Philippines are MSMEs and they contribute to almost 63% of total employment. However, SMEs get only 9.2% of loans and financing from the country's major banks.

Many MSMEs are suppliers and service providers to large enterprises. They create jobs for the country's growing labor force and stimulate economic development in rural and remote areas. They also serve as a breeding ground for new entrepreneurs and innovative business ideas.

A vibrant MSME sector is an indication of a thriving and growing economy. But even with policies that aim to enable MSME development, the sector still faces various constraints that prevent it from realizing its full growth potential.

"We believe there is huge economic potential in the MSME sector and we have confidence in how our technology can help enterprising businesses leapfrog into better ways of doing business. We are excited to be partnering with UBX in the Philippines, because we share the same vision of how technology can empower communities that traditionally cannot be reached. With OneConnect's proven technology solutions and UnionBank's deep market knowledge and domain expertise in catering to MSMEs, we look forward to introducing impactful financial solutions for MSMEs in the Philippines," said Ms. Tan Bin Ru, CEO (Southeast Asia) of OneConnect Financial Technology.

The blockchain-enabled digital platform will be operational by end-2019, and will be made available to a progressively larger community of MSMEs by 2020.

The financing platform is an end-to-end platform that leverages OneConnect's award-winning facial recognition technology, micro-expression interviewing technology, and big data-enabled artificial intelligence. It covers a wide range of business finance needs, such as multi-channel loan applications, credit assessment, loan disbursement, and anti-fraud checking. It significantly reduces approval time while providing more accurate risk assessment.

With digital loan application channels enabled, the platform allows lenders to target a wider MSME population in the Philippines. These MSMEs can also use the platform's advanced capabilities such as AI, big data, remote interview with micro-expression technology and anti-fraud engine.

For supply chain finance, blockchain technology is leveraged to allow greater penetration across and into the supply chain. Through OneConnect's industry-leading Blockchain-as-a-Service (BaaS) platform, important data including order and logistics information is encrypted while enabling critical functions such as paperless contracts, contract judgement, compliance verification and financing risk assessment. On this platform, e-payment undertakings (EPUs) are transferrable, divisible and discountable, while being recorded on the blockchain to make it tamper-proof and traceable. The platform enables financial inclusion as MSMEs usually form the second, third, and even deeper tiers in a supply chain. The supplier base can now have access to more cost-efficient funding, which was previously unavailable to them.

UBX's parent company, UnionBank, is the Philippines' ninth largest bank in terms of assets and the leading digital bank in the country. UnionBank is an award-winning bank known for enabling the country's fintech sector through its own visionary digital transformation. UnionBank pioneered online banking in the Philippines and started the Philippines' first electronic savings account, the EON Cyber Account. UnionBank also has a strong focus on serving the Philippine SME community through UnionBank GlobalLinker. This platform connects more than 40,000 SMEs and offers exclusive deals and business management tips, aimed at helping SMEs grow and "tech up."

"As the fintech arm of the nation's leading innovative bank, we are continually seeking new ways to better serve our customers in disruptive ways that also solve real problems. In the Philippines, 77% of our population is unbanked and we have a diverse geography that spans across over 7,000 islands. Digital financial solutions - such as the ones we are co-creating with OneConnect - will allow us to include more MSMEs in the financial system. We seek to transform the lives of Filipinos, and accelerate their growth by connecting them to a whole new world of opportunities," said Mr. John Januszczak, President & CEO of UBX.

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