At least five rural banks in Southern Philippines have joined the pilot Ethereum-based blockchain initiative for real-time retail payments. Union Bank of the Philippines (UnionBank) is rolling out the project in collaboration with US-based blockchain software technology firm ConsenSys.
Dubbed i2i, the project aims to bring an estimated 35 million unbanked Filipinos into the financial system, UnionBank chair Justo Ortiz said, adding that the initiative is also geared towards connecting the country’s rural banks into the domestic financial network.
"The i2i Project is a real-time, cost-effective and secure retail payment system in the blockchain," he noted, adding that blockchain could "crack the hole of financial inclusivity."
Initially, the pilot run will include PR Savings Bank, City Savings Bank, Cantilan Bank of Surigao del Sur, Progressive Bank, and FairBank. The Philippine central bank has given approval for the five rural lenders to join the pilot program.
UnionBank first revealed its plan to interconnect rural banks through blockchain early this month. The application of the technology in their systems is expected to reduce the number of steps in certain transactions from the current 20 to just three.
To put this into perspective, rural banks are retail banks operating in the countryside and focused on servicing communities usually overlooked by the big banks and other financial institutions. These rural institutions are not linked to the country's interbank network and are not members of Bancnet. In addition, they do not belong to the Philippines Clearing House, meaning they cannot issue checks. At least 554 out of 1,634 municipalities and cities in the Philippines remain unbanked.
Aiai Garcia, Asian head of ConsenSys Solutions, added that UnionBank and its partners would be using the Kaleido platform. This is the first blockchain to use the Ethereum network, making the technology more straightforward and user-friendly for enterprises while providing security and high levels of performance and robustness.
UnionBank is ConsenSys’ first bank client in the Philippines, Garcia added, going on to say:
"Our appetite for experimentation is warming the country up for significant transformational change for the next generations to come.”
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