DAVAO CITY, May 23 (PIA) — The Union Bank of the Philippines is utilizing the so-called blockchain technology in helping rural banks better serve their communities.
Blockchain is an incorruptible ledger of economic transactions shared across a network of computers. The technology provides a transparent and secure means for tracking the ownership and transfer of assets.
The technology enables rural banks to be connected into the country’s main financial network.
The project uses Consensy’s Kaleido Blockchain platform to enable the linkage of rural banks to Union Bank.
“With Union Bank, the rural banks now have access to the main banking network, which allows them to perform important banking functions that universal banks can also do,” Union Bank Chairman Justo A. Ortiz said.
Currently rural banks are not members of the Philippine Clearing House and the SWIFT (Society for Worldwide Interbank Financial Telecommunications) Network. Their business processes are very manual and paper-based as requirements to be part of BancNet, Philippine Clearing House Corporation and SWIFT are too complex.
According to Tanya Hotchkiss, executive vice-president of Cantilan Bank Inc., a regular interbank transaction with their bank would take one day to a month to be completed.
That transaction would undergo 25 different processes handled by five departments.
A blockchain process would cut down that transaction to just three processes instead of 25 and would just last about 5 minutes.
Cantilan Rural Bank in Surigao del Sur was part of the UnionBank’s “i2i” pilot project that also involved six other rural banks.
Hotchkiss said the i2i project matches their rural bank’s strategy to use digital technology to enable financial inclusion.
In an earlier digital innovation, Cantilan Bank Inc. transferred their core banking functions to the internet cloud, making it the first rural bank in the country to have an internet-based platform.
“We see a lot of potential with blockchain,” Hotchkiss said.
Ortiz disclosed that they intend to connect with the dwindling number of rural banks in the country. It is estimated that 400 rural banks with around 2,000 branches are operating in the Philippines.
“Rural banks are critical as they are embedded in remote communities,” said Ortiz, citing the importance of helping these banks scale up as they would eventually spur rural development.
“With blockchain we may have cracked the code for inclusive progress,” he concluded. (PIA/RGA)
Source: PIA Feed