The Philippines have recently announced a potential test run of a real-time retail payments system developed by Consensys, which is based off of the Ethereum blockchain. The mission behind introducing this system is to get unbanked consumers into the country’s financial system.
The five banks that have been chosen, come from Mindanao, the second largest island in the country, which includes Cantilan Bank, PR Savings Bank, City Savings Bank, FairBank and Progressive Bank.
According to the Union Bank, which is the main Bank of the Philippines, the entirety of this project has been named the ‘Project i2i’, where i2i takes on several meanings including “island-to-island, institution-to-institution and individual-to-individual.” Additionally, they’ve stated that this action has been implemented to bring together rural banks with the Philippines’ main banking system in place.
Philippines financial network works differently, as some of its banks, mainly those situated in rural regions are not authorized to do as much as the main financial system. More specifically, these institutions neither belong to Bancnet nor do they belong to the Philippines Clearing House. This means that such rural banks do not have the authority to issue checks, but rather run basic financial services, mostly dealing with cash and money orders, for its people.
According to a statement made by the country’s central bank, over half of the cities in the Philippines remain unbanked. To resolve this disparity, the blockchain platform has been applied, as Said Union Bank’s operations chief, Henry Aguda:
“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”
As for the blockchain aspects of this $3 million project, Consensys’ Kaleido platform will be used, which is a service platform that was launched by the partnership between Amazon Web Services (AWS) and Consensys. The platform is known for its several features including consensus mechanisms, integrated analytics and multiple protocols.
The EVP at Cantilan Bank, Tanya Hotchkiss, sees a lot of hope in this project, as she believes this test run:
“could lead to faster bank-to-bank transfers with… reduction in transfer fees.”
Furthermore, the executives involved are anticipating more for the reduced transaction fees than anything – possibly impacting the rates of the Philippine peso to go from PHP50 to PHP150. Will the Philippines succeed in their goal of getting in 100 rural banks into their main financial system by year-end?