Union Bank of the Philippians on Monday unveiled a plan to link rural banks using blockchain technology to achieve interconnections similar to what the SWIFT and Bancnet networks are currently offering to banks on their platforms.
Union Bank chairman Justo Ortiz made the revelations during the launch of the blockchain association of the Philippines. He said his institution would first pilot-test the system in six rural banks as per the approval from the Philippine Central Bank.
Through the use of blockchain technology, Ortiz hopes to limit the number of steps in completing certain transactions. He is optimistic that the technology will reduce certain transactions from 20 steps to just three.
Speaking at the Monday launching forum, Ortiz noted that “The rural banks are the first mile to getting those members of the community that are unbanked.”
As part of its ambition to exploit the opportunities offered by blockchain technologies, the bank intends to broaden its blockchain programmer team from 30 to 100 before the end of this year.
“We need to be able to bring people from abroad to basically up the game here at the enterprise level. At the end of the day, if the enterprises adopt, it will force the individuals to adopt. It’s chicken and egg,” Ortiz told the gathering before adding that blockchain could help “crack the code of financial inclusivity.”
In a previous interview with Cryptovest, Union Bank CEO Edwin Bautista characterized blockchain technology as the future in answering a question as to why Union Bank is the only one of 10 banks in the country to have welcomed blockchain technologies and digital currencies.
“We really do not know if crypto currency will be the future currency and replace fiat. No one knows for certain. But what if it were? We have to keep an open mind about it. We cannot reject something just because we do not understand it,” Bautista said.
In January, Union Bank inked a deal with credit card giant Visa to create a cross-border bank-to-bank (B2B) payment systems that will benefit small- and medium-sized enterprises (SMEs). The first of its kind in the Philippines, the platform intends to ease B2B transactions, with a focus on SMEs to recipient banks.
Ortiz stated at the time that the Visa B2B Connect system would permit payment processing in real time or at least within a day instead of the usual three to five business days.