The Cooperative Bank of Oromia (COOPBank) has initiated a groundbreaking step in modernizing its financial services by integrating blockchain technology into its remittance services for Ethiopians living abroad. The bank has partnered with the Estonia-based Inclusive Finance Tech Foundation (InFTF MTU) to launch the first blockchain-enabled remittance platform in Ethiopia, designed to provide faster and more affordable cross-border money transfers for the nation’s diaspora.
Addressing the Challenges of Traditional Remittances
Ethiopia has a large diaspora community, with millions of citizens living abroad who regularly send financial support to family members back home. However, traditional methods of remitting money have long been characterized by inefficiencies, including high transaction fees and long processing times. These delays and costs disproportionately impact people who rely on remittances as a primary source of income. COOPBank’s new service aims to tackle these challenges by offering a more streamlined, cost-effective solution for money transfers.
The bank’s leadership is hopeful that the new blockchain-based platform will significantly improve the speed and affordability of remittances, benefiting communities across Ethiopia. COOPBank executives emphasized that their collaboration with InFTF would modernize the country’s financial services through the implementation of cutting-edge blockchain technology.
Instant Transfers and Reduced Costs
The newly launched service promises to revolutionize how the Ethiopian diaspora transfers money. According to COOPBank, the blockchain-empowered platform enables users to transfer funds in under three seconds, a significant improvement over the slower processing times associated with traditional remittance services. Additionally, the service aims to eliminate the high fees that are commonly charged for international money transfers, making the process more affordable for users.
InFTF contributed its blockchain expertise to develop this system, which is built on the Xahau blockchain network. Xahau is a decentralized and scalable platform that includes smart contract functionality, a feature that adds automation and security to financial transactions. Smart contracts ensure that all transactions are compliant with existing regulations while also protecting users from fraud. COOPBank highlighted that these elements of security and compliance are critical to building trust in Ethiopia’s digital financial ecosystem.
A member of the InFTF management board noted that their technology is intended to create a robust and transparent environment accessible to everyone. The blockchain platform’s focus on underserved regions, particularly those that have been overlooked by traditional financial systems, is a key element of this initiative. By leveraging blockchain, InFTF aims to bring the benefits of modern financial technology to a broader population, addressing long-standing challenges in cross-border transactions.
A Broader Digital Transformation
The blockchain-empowered remittance platform is not the only technological innovation introduced by COOPBank in 2024. Earlier this year, the bank unveiled an artificial intelligence-supported online banking platform, specifically designed for Ethiopians living abroad. This platform allows the diaspora community to manage various banking processes online, including opening and managing accounts, further expanding the bank’s digital offerings to meet the evolving needs of its customers.
COOPBank’s President underscored that the bank’s continued focus on modernizing financial services will have a positive impact on both the bank’s customers and the broader Ethiopian economy. He pointed out that the new blockchain-powered remittance service is part of a larger effort to empower communities across Ethiopia by making financial services more accessible and affordable.
A Growing Institution with a Vision for Innovation
Founded in March 2005 with a majority of its shareholders comprising cooperative societies, the Cooperative Bank of Oromia has grown into one of Ethiopia’s largest private banks. According to data from the bank’s website, it currently boasts assets valued at more than 140.52 billion birr and operates a network of over 760 branches nationwide. The bank serves more than 13.4 million account holders, making it a key player in the Ethiopian financial sector.
COOPBank’s recent ventures into blockchain and AI-driven financial solutions demonstrate its commitment to leveraging technology to enhance its service offerings. By embracing blockchain technology, the bank positions itself as a leader in digital innovation within Ethiopia’s banking industry. The launch of this blockchain-enabled remittance service marks a significant milestone in the bank’s ongoing efforts to transform Ethiopia’s financial landscape and cater to the needs of its rapidly growing diaspora community.
In conclusion, the Cooperative Bank of Oromia’s introduction of blockchain technology into its remittance services is set to revolutionize cross-border money transfers for Ethiopians abroad. The collaboration with InFTF, coupled with the advanced capabilities of the Xahau blockchain, is expected to make remittance services faster, more affordable, and more secure for the diaspora. As COOPBank continues to innovate, it stands as a leading example of how financial institutions in emerging markets can leverage blockchain to drive greater financial inclusion and efficiency.