Leah Callon-Butler, a CoinDesk columnist, is the director of Emfarsis, a consulting firm focused on the role of technology in advancing economic development in Asia.
Rebit – that is, Bitcoin-remittance or "Rebittance" – is a service that lets you send money from anywhere in the world to anyone in the Philippines using Bitcoin. Created in 2014 by Satoshi Citadel Industries (SCI), the company that Miguel co-founded, Rebit works so bitcoin turns up as Philippine pesos at one of Rebit’s cash pick up centers. With more than 10,000 partnering payout locations across the nation, it’s easy to grab your cash no matter where you are across the sprawling Philippine archipelago of over 7,400 islands. In my case, I went to collect from my local pawnshop, Cebuana Lhuillier.
Over here, pawnshops do a lot more than just pawn valuables. In a country where almost 90 percent of adults do not have a bank account, and international remittances make up 11 percent of GDP, pawnshops go the last mile for millions of unbanked people who still need to send and receive money. At the pawnshop, you can also pay bills, purchase microinsurance or borrow cash. In the case of the latter, despite a notoriously bad rep for dishing out predatory loans and high interest rates, an emergency loan from the pawnshop could be a lifeline for someone without access to traditional credit.
But dealing with pawnshops is super inefficient. To redeem my 500 PHP (about $10), I had to wait outside the shop in the sticky humidity for over an hour, and in total, I had to fill out three different paper forms. The first was handed to me while I was outside, sweating profusely. Then, as I progressed into the upper echelons of the air conditioned indoor queue, I received another form. And then a third, when I finally arrived at the teller desk and we got into the actual cash out process. Each form was requesting fairly similar info so I don’t see why I had to supply it over and over again. At least it gave me something to do.
Paper-based systems built on bricks-and-mortar are a drag at the best of times, but the COVID-19 situation is making it worse. In addition to the long wait times, and as a result of the Enhanced Community Quarantine, some pawnshops are reducing their operating hours or closing altogether – even though they are classed as essential services. Same goes for other physical outlets offering cash-in-and-out services, like 7-11 and shopping mall kiosks. On top of that, some people are physically unable to travel to the outlet, since public transport has been suspended and military-guarded checkpoints are restricting the movement of private vehicles.
Even if you can get there, and particularly if you have vulnerable family members at home, abandoning your social distancing mantra to join a long queue of people is probably not high on your agenda.
Miguel, who lives in Manila, knows how that feels. His sister is immunocompromised and they are quarantining together, so he is hyper aware of any situation that could risk infection. Add to this his enduring belief in bitcoin as the “unstoppable, uncensorable, non-confiscatable, self-sovereign, free and open financial system for all” (see Twitter) and it’s obvious that Miguel is hellbent on seeing the world go digital. In addition to all the benefits like greater connectivity, reduced costs and enhanced productivity, for Miguel and his family, moving the economy online could literally save lives. And with most of the usual analogue channels out of action, people and businesses in the Philippines are scrambling to do just that.
If I had to guess the nightmare narrative that keeps the CEO of Cebuana awake at night, it’s probably some Blockbuster-versus-Netflix tale of tech disruption. Thing is, if you just look at all the people whiling away the waiting time on their smartphones, that worst-case-scenario is already playing out in broad daylight. According to a 2019 report by Hootsuite and We Are Social, at 10 hours per day, Filipinos spend more time online than any other nation in the world, and they are the world’s number one users of Facebook. Nearly two thirds of the population own mobile phones and almost 70 percent have access to the internet. So even for a giant like Cebuana, the blatant reality is the same: Disrupt or be disrupted.
As the largest non-banking financial services provider in the Philippines, Cebuana probably could have taken a stake in almost any local fintech startup. But in 2019, Cebuana acquired a stake in SCI. In clear recognition of the alignment between crypto and international remittances, as well as other blockchain-based use cases such as digital ID and peer-to-peer payments, Cebuana signaled the first steps toward a major digital overhaul of their expensive, inefficient and non-scalable paper-based, bricks-and-mortar business.
Of course, Cebuana are not the only financial institution in the race to digital transformation, and notably, on the blockchain front, UnionBank’s UBX has successfully connected the rural banks of the Philippines to the main banking system via the i2i network, cutting processing times from days to minutes. With 2,500 branches nationwide and 25 million customers, Cebuana represents a formidable user base. It has the advantage of reach into rural areas, and one of the strongest footholds into the unbanked population – which is ultimately the largest consumer segment in the Philippines, if you can crack it. Whether it can translate all this into a digital leadership position remains untold, but the wheels appear to be in motion and coronavirus might add further momentum.