The use of blockchain technology, popularly known as the backbone of cryptocurrencies, will expand annually by 63% within this decade. This was one of the findings of Research and Markets, one of the world’s largest market research stores, which attributed the expansion to opportunities arising from the COVID-19 pandemic.
The research firm also sees the global market for banking and finance surging to about US$95 billion by 2030.
“The market’s growth is driven by the increasing need for faster and cheaper cross-border payment systems, higher compatibility with the financial services industry ecosystem, and a growing demand for complete security mechanisms,” the report said.
In the Philippines, the Bangko Sentral ng Pilipinas (BSP) is developing a roadmap that aims to fast-track web-based payments and upgrade the skill level of bank supervisors with emergent technologies.
These technologies include machine learning, which helps in the automation of business processes, as well as blockchain, the technology behind cryptocurrency that is now being used in different commercial activities. The ultimate goal is to be able to nurture a next-generation pool of talents needed to digitalize the industry.
Supervisory and regulatory technologies are likewise being eyed for development.
Speaking of supervisory and regulatory technologies, Financial Sector Forum (FSF) chairman and current BSP chief Benjamin Diokno said during a recent gathering that the FSF remains committed to developing the next generation of bank supervisors. One way to do this, he explained, is by equipping them with the required knowledge and competence in these technologies.
To achieve this goal, the FSF, through its Information Exchange Committee, is offering additional training programs throughout the year to allow for a more in-depth understanding of the technologies used by financial sector supervisors. The organization is also organizing a series of webinars that discusses how exponential technologies may be harnessed for the financial sector.
The FSF is composed of the Bangko Sentral ng Pilipinas, Philippine Deposit Insurance Corporation (PDIC), Securities and Exchange Commission (SEC), and the Insurance Commission.
Aside from training programs, the FSF believes that adapting to digital technologies can also ramp up the role of microfinance institutions (MFIs) in helping bridge the gap in financial inclusion in the Philippines. MFIs, after all, outpace large banks in providing services to Filipinos who have limited or no access to financial services.
A recent BSP survey conducted in 2019 shows that MFIs reach 84 percent of towns and cities across the archipelago. In comparison, banks — from large universal and commercial ones to smaller thrift and rural banks — have a presence in just two-thirds (69%) of towns and cities.
Blockchain to help streamline banking and lending services
According to ConsenSys Software Inc., blockchain can help streamline banking and lending services. This is because the technology may easily be utilized to reduce counterparty risk as well as decrease issuance and settlement times.
The New York-based blockchain software firm also explains that blockchain allows for easy authentication of documents and know-your-customer data, thus helping reduce operational risks. It also enables real-time verification of financial documents.