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.
The piloted rural banks are Cantilan Bank, Inc. of Surigao del Sur, PR Savings Bank, City Savings Bank, FairBank, and Progressive Bank. The Bangko Sentral ng Pilipinas approved the five banks’ participation in the pilot run.
UnionBank chair Dr. Justo Ortiz said the bank’s i2i Project aimed to bring unbanked Filipinos to the financial system, as well as connect rural banks into the country’s financial network.
“The i2i Project is a real-time, cost-effective and secure retail payment system in the blockchain,” Ortiz said.
He also said the blockchain could 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 and 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 P1 compared to the current rate of P50 to P150.
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. (PNA)