UnionBank targets to link more than 100 rural banks to blockchain in 2018
Union Bank of the Philippines is targeting to link more than 100 rural banks in the country by end of this year, using blockchain technology with the aim of serving unbanked Filipinos.
UnionBank chief technology and operations officer Henry Aguda said on Friday the bank has committed $3 million for project i2i, which pertains to “island-to-island,” “institution-to-institution,” and “individual-to-individual.”
The bank has partnered with global blockchain firm ConsenSys for the project that was launched on Tuesday, May 22. Six rural banks covered during its pilot run.
Blockchain is a distributed data ledger which involves a large network of entities where data is stored in “blocks.”
The storage units are continuously updated and being secured using cryptography, making data management and data-driven processes decentralized, tamper-proof and more transparent.
“Hopefully, we could go above 100 [rural banks] before the end of this year ... It depends on how fast the rural banks will adopt,” Aguda said.
UnionBank president and CEO Edwin Bautista said the initiative aims to help rural banks connect through a central system in order to promote financial inclusion.
“How can you help the unbanked if the rural banks are unbanked?” Bautista said.
Aguda noted the initiative will reduce rural banks” data connection expenditures as they are not connected to any system such as Bancnet and SWIFT like the larger banks.
“If you are a rural bank, you’re not connected to Bancnet and you’re not connected to SWIFT. In order for you to connect to them you have to spend on data center, cyber security infrastructure, so it's very expensive,” the bank's chief technology officer said.
“With this, 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,” Aguda said.
UnionBank’s chief technology officer said lender aims to connect all or around 500 rural banks in the Philippines to the blockchain. —VDS, GMA News