In a bid to spread financial inclusion to a largely unbanked population, the Union Bank of the Philippines (UnionBank) is piloting real-time retail payments on the Ethereum blockchain with five rural banks in Mindanao, the second largest island in the country.
Connecting the unbanked
According to local news outlet Philippine News Agency (PNA), the payment system developed by US-based startup ConsenSys in collaboration with UnionBank will be taking aim at an estimated 35 million unbanked Filipinos, linking rural banks to the national financial network.
In 2017, Finance Secretary Carlos G Dominguez III described the present financial inclusion problem to the Manila Bulletin: “Over 86 percent of Filipinos remain unbanked to this day. That is an intolerable ratio of the population excluded from the financial mainstream… We cannot have a new economy with an ancient banking system.”
UnionBank Chair D. Justo Ortiz said that “the i2i Project is a real-time, cost-effective and secure retail payment system in the blockchain”, adding that the technology can help “crack the hole of financial inclusivity”.
Asia-Pacific ConsenSys Solutions lead Aiai Garcia gave further details on the pilot project, saying that the collaboration would be utilizing the Kaleido platform, which itself is the result of a partnership between Amazon and ConsenSys.
Kaleido is a brand new Blockchain Business Cloud, designed to speed up and simplify any enterprises’ attempts to utilize blockchain technology and is the first Software-as-a-Service that features Ethereum Packages Geth and Quorum.
Currently, the rural banks in mention are ‘retail banks’ that operate in the Filipino countryside and are often overlooked by the big banks and financial institutions as they serve far smaller communities.
The issue that arises from this is that these rural institutions have no links to the countries interbank network nor are they member of BancNet, the largest inter-bank network in the Philippines based on “the number of member banks and annual transactions” it has.
The blockchain pilot reduces the costs of connecting rural banks with BancNet or SWIFT services, otherwise requiring them to spend hefty sums on data centers and cyber security infrastructure, according to UnionBank technology and operations chief Henry Aguda. He also noted that USD 3 million had been invested into Project i2i.
Aguda also hopes to bring in over 100 banks from rural territories in the Philippines before 2019, with an even broader vision to connect all 500 or so rural-banks to the blockchain.
He added: “With this [blockchain platform], they don’t have to spend anything. They just have to load the application i2i in their computers, tablets, or smartphones then they can transact bank-to-bank connected to blockchain.”
Blockchain-related revelations are coming fast from the Philippines. Bitcoin News previously reported that the Filipino ‘Silicon Valley’ had given a firm go-ahead to the countries first ten crypto and blockchain exchanges. Prior to that, announcements of a ‘special economic zone‘ being established for said companies was reported by Bitcoin News in early May.
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