UNIONBANK of the Philippines launched on Tuesday, May 22, its Project i2i, its initiative to connect rural banks to the country's main financial network and serve more Filipinos without bank accounts through blockchain technology.
"One of our mandates is to promote financial inclusivity and with blockchain we have cracked the code on it," Dr. Justo Ortiz, Union Bank chairman, said during a press conference on Tuesday at Park Inn by Radisson Davao.
According to the Bangko Sentral ng Pilipinas (BSP), blockchain technology is an emerging fotm of financial technology, is a decentralized public ledger that has the potential to transform payments.
In a statement, Ortiz said Project i2i, which runs on Consensys' Kaleido blockchain platform, links the rural banks to each other and to Union Bank.
In a statement, Concensys said Unionbank is their first client in the Philippines.
"This system will not only facilitate interbank money transfer between rural banks but also enable them to eventually capture new opportunities related to financial inclusion in the Philippine banking industry, by virtue of being interconnected," the company said in a statement.
Kaleido allows enterprises to implement blockchain in a more accessible way while still maintain levels of robustness, security, and performance.
Through the Kaleido blockchain platform the banks will be able to do real-time funds transfers between banks, domestic and international.
With the technology, the rural banks can offer their connected network to banks, non-banks, corporate, and retail customers. The banks and the customers can also have access to universal banking products and also share their own services on the platform.
Ortiz said Project i2i is a real-time, cost-effective, and secure retail payment system in the blockchain.
Arvie de Vera, Union Bank Fintech Business Group head, said they are currently doing a three-month pilot run of the project with five rural banks as approved by the BSP. These banks are Cantilan Bank, PR Savings Bank, City Savings, Fairbank, and Progressive Bank.
He said they are eyeing to roll out the project commercially by the first quarter of 2019.
"We are taking it a little slowly, starting with one branch at a time as it requires training to ensure the quality," De Vera said.
He added that in the case of Cantilan Bank, a rural bank in Davao del Sur, they started with one branch.
Tanya Hotchkiss, executive vice president and chairman of the IT steering committe of Cantilan Bank, said through the use of the technology they were able to make their processes more efficient.
For example, their 26-step manual process was cut down to only five steps. While the processing time of transactions was cut to only around five minutes from the previous one day to one month.
This is not the first time the bank implemented technology to improve its banking services as it also pioneered the use of cloud banking in the country last year.
Justo said Project i2i is part of their corporate social responsibility program.