A research into the Philippine remittance market shows that the country will experience huge growth leading up to 2023.
The study, conducted by respected group Ken Research, reveals that continued use of cryptocurrency will transform the country’s financial sector and spur further growth.
According to the report, the Philippines is set to see its international remittances grow, largely driven by a growing number of overseas Filipino workers (OFW) and adoption of new technology to complement traditional banking channels.
The country is likely to benefit from an increased use of crypto, biometrics, and other technological advancements that will revolutionize the mobile financial industry.
These approaches were finding rapid growth following the introduction and extensive use of mobile technologies for money transfer. They are a big factor that could determine the future growth of the country’s domestic remittance ecosystem, including the payment of bills.
The research findings, contained in a comprehensive study titled Philippines Money Transfer and Bill Payment Market Outlook to 2023, had one very interesting point. It showed that if the remittances sector continued to grow as it was doing, then the country’s remittances volume would reach over $42 billion by 2023.
The study found that Overseas Filipino Workers (OFWs) were by far the biggest contributor to the growth witnessed in the Philippines burgeoning economy. The report notes that:
“International remittance market in the Philippines will continue to be driven by increased migration of Filipinos to other countries.”
Among the OFWs, the study finds a curious scenario that is going to grow the remittance industry in the country. The impetus will come from the growing field of unskilled workforce heading abroad.
“Unskilled workers and laborers will uphold their status as the largest deployed fraction of overseas workers and will continue to account for the largest share of aggregate remittances.”
In addition, an ever-expanding financial industry led by the country’s banked population had offered banks the opportunity to improve on their services, further increasing the rate of growth.
By December 2017, banks provided the biggest channels through which the country processed international remittances. But that trend is likely to change soon.
There are more non-banking channels taking over, both in the international and domestic remittances as well as in bill payments.
Ethereum key to adoption
Ethereum could have a big role to play in the Philippines remittances industry, according to the research findings.
The report explains that the Ethereum blockchain can help reduce the cost of remittances. By singling out Ethereum, the study notes that it isn’t designed like Bitcoin which is basically just a cryptocurrency.
According to the study, Ethereum’s native token ether (ETH) has the functionality to help reduce the cost of remittances sent over the blockchain. Ether is used as the gas or more specifically, the transaction fee on the network.
Decentralized applications (dApps) built on the blockchain and which use Ether as gas can greatly reduce the amount of money used to complete these transactions.
Last month, the country’s central bank, the
Bangko Sentral ng Pilipinas (BSP), the country’s Central Bank announced last months that there were plans to partner some commercial banks with the aim of exploring the use of blockchain technology.
The BSP noted that the new technology could help transform the South Asian nation’s money transfer sector as well as serve as a platform for financial inclusion.
International money transfer services like MoneyGram, Western Union, and Wells Fargo continue to dominate the country’s remittance sector. However, domestic platforms like LBC Express among others were developing a presence that will see competition improve the entire industry.
But the key could be in the adoption of crypto and blockchain technology.
Source: Ken Research – “Philippines Money Transfer and Bill Payments Market Outlook to 2023 – By Domestic Remittance Banking and Non Banking (Pawnshops, MTO) Channels, International Remittance Flow Corridors and Channel; Bill Payment Segment”