DAVAO CITY–Five rural banks in Mindanao have been picked to pilot the blockchain initiative of the Union Bank of the Philippines (UnionBank) and ConsenSy, a US-based blockchain software technology company.
UnionBank chair Dr. Justo Ortiz said Thursday the bank’s i2i Project aims to bring unbanked Filipinos to the financial system, as well as connect rural banks into the country’s financial network.
The piloted rural banks are Cantilan Bank, Inc. of Surigao del Sur, PR Savings Bank, City Savings Bank, FairBank, and Progressive Bank. The banks carry an approval from Bangko Sentral ng Pilipinas to be part of the pilot run.
“The i2i Project is a real-time, cost-effective and secure retail payment system in the blockchain,” Ortiz said.
He also said the blockchain can help “crack the hole of financial inclusivity.”
Blockchain, originally developed as the accounting method for cryptocurrency, is a digitized, decentralized, public ledger of all transactions. It allows participants to keep track of all digital currency transactions even without central record-keeping. The technology is used to verify transactions and creates an indelible nd unchangeable record. Under it, the transaction’s authenticity can be verified by the entire participants instead of a centralized authority.
Tanya Hotchkiss, executive vice president of Cantilan Bank, Inc., said they’re looking at a faster system for bank-to-bank transfer saying the current practice takes a considerable amount of time.
Hotchkiss hopes that the blockchain technology will change this, citing for instance the drastic reduction in fund transfer fee to only PHP1 compared to the current rate of PHP50 to PHP150.
She pointed out that in the old system, manual reconciliation and verification take about a day to one month, with five departments and five employees involved in at least 26 processes.
Under the new innovation, Hotchkiss said the steps have been shortened to five and the automatic reconciliation and bank verification can be done in five minutes. The people handling the process have also been reduced to at least one to two persons.
On the other hand, Aiai Garcia, ConsenSys Solutions Lead in Asia-Pacific, disclosed their collaboration with UnionBank takes advantage of the Kaleido platform, which makes blockchain simpler for enterprises.
Kaleido is the first blockchain to utilize the Ethereum network that allows enterprises to implement the blockchain in a more accessible way while still maintaining a level of robustness, security, and performance.
Garcia said UnionBank is their first bank client in the Philippines.
Meanwhile, she said the Philippines is a prime test case for blockchain noting that both public and private sectors are interested in how blockchain can be applied to improve on existing systems.
“Our appetite for experimentation is warming the country up for significant transformational change for the next generations to come,” she said. (Digna D. Banzon/PNA)
