Blockchain To Transform Rural Banking In The Philippines
Rural banks in the Philippines are embracing blockchain to expedite the process of integration of residents into mainstream banking. The Philippine Information Agency released a report highlighting an initiative called Project i2i. The Union Bank of the Philippines spearheads the project. The project would leverage the Kaleido blockchain platform designed by the ethereum startup Consensys. Justo Ortiz, chairman of UnionBank, spoke at length about the project at Consensus 2018 event in New York. He stressed the need to bring rural banks into the mainstream financial network of the Philippines with the help of blockchain fuelled retail payment platform.
“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. The rural banks who are not part of the Philippine Clearing House and the SWIFT (Society for Worldwide Interbank Financial Telecommunications) Network have to depend on manual paper-based work. The requirements to be included in BancNet, Philippine Clearing House Corporation and SWIFT are cumbersome and complicated.
Tanya Hotchkiss, executive vice-president of Cantilan Bank Inc., revealed that a typical transaction with their bank might take one day to one month to be completed. The transactions have to go through a list of 25 processes. Five departments handle these processes. Adoption of blockchain would minimize the operations and transactions could be completed in five minutes. Cantilan Rural Bank in Surigao del Sur was involved in UnionBank’s “i2i” pilot project that also included six other rural banks.
The i2i project complements Cantilan Bank’s strategy to leverage digital technology to ensure financial inclusion of the unbanked population. The bank had dabbled in innovation before and moved its core banking functions to the cloud. The bank earned the rare distinction of the first rural bank in the Philippines to get an internet-based platform.
The Philippines has a network of 400 rural banks with 2,000 branches. These rural banks hold significance because they are located in remote areas. Digitization of these banks would fuel the economy and bring a large number of people under banking net ensuring easy access to credit.
Image via AMA Bank
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