Philippine banks boost tech in push for financial inclusion

Lenders are offering digital loans for farmers, a 10-minute paperless account opening process, and money transfers through mobile numbers.

Philippine banks are continuously coming up with innovative retail offerings to tap into its unbanked demographic which accounts for about 70% of the country’s over 100 million population.

At the Manila Leg of the 2019 Asian Banking & Finance Retail Banking Forum, more than 70 top executives from the country’s biggest banks and delegates who flew in from Malaysia and India exchanged ideas on how banks could design and upgrade their services to enhance inclusion and user engagement.

Ana Maria Delgado, chief customer experience officer and senior vice president of Union Bank of the Philippines, the country’s ninth largest bank by assets, said that they have unveiled a new feature in their mobile app that allows users to open a fully functioning savings accounts in under 10 minutes from the usual 30-40 minutes, all without having to step into a branch.

“Why do we make people go to our branch endure long lines fill up lengthy forms just to go online? This drove us to develop a general principle that none of our app experiences should require you to go to a branch. My general rule of thumb with a team is if my mom or your mom can't figure it out, we need to go back and redesign,” Delgado said, adding that banks should strive to be accessible like Facebook and Instagram.

A more accessible approach also means letting their customers transfer money using their phone numbers. In the span of a week, the mobile money transfer service has been used by 15% of Metrobank users, according to Pradeep Pant, president of Metrobank Card Corporation.

Mark Bantigue, vice president and head of e-commerce at Security Bank, said that their bank has yet to venture into blockchain and QR codes unlike their peers that have integrated the technology into their operations as it has other more pressing priorities in its digital transformation plan.

But this is not to say that they are tech laggards as Bantigue revealed that Security Bank is working on an electronic Know Your Customer (eKYC) scheme which will capture users’ passports in order to get their information through a near field communication (NFC) lift, a first of its kind in the Philippines. The process will eliminate the need to fill up forms and strengthen information security for both the banks and the customers. Moreover, the executive also shared that Security Bank’s digital efforts have borne fruit as one in four of credit card applications have been approved online.

A growth potential for retail bankers also lies in the Philippine countryside. To take advantage of this underserved market, Cecilia Borromeo, president and CEO of state-owned Land Bank of the Philippines, cited their agent banking programme which aims to expand Land Bank's reach in remote and unbanked municipalities. The bank also forges partnerships with cooperatives, associations and SMEs. “For 2019, we pilot agent banking in eight remote areas and eventually expand the coverage in succeeding years to reach more provinces and towns,” Borromeo said.

The financial inclusion agenda is being met by RCBC through their digital currency offering called e-Piso which has allowed the bank to disburse about $19,000 (PHP1m) in loans to farmers in the countryside, according to Margarita Lopez, FSVP head of digital banking and operations group at RCBC.

Retail clients can also unlock more sophisticated earnings opportunities through the investment units of banks. Eduardo Francisco, president of BDO Capital and Investment corporation pointed out that in a country where only 30% out of over 100 million are in possession of a bank account, only 840,000 accounts are registered as retail investors in the Philippine Stock Exchange, of which more than two thirds come from the National Capital Region (NCR). Francisco believes that banks can unlock a significant revenue opportunity in this untapped market and that BDO is seeking more overseas Filipino workers (OFWs) as retail investors.

In extending loans, credit profiles are an important consideration. Kersten Eero, senior business development manager at cloud-based service provider Big Data Scoring, makes the case for an advanced credit scoring system that assures profitability, minimises loss and reduces the cost of manual assessment. Meanwhile, Indranil Basu Roy, head of sales for APAC, Middle East & Africa at tech platform Moven Enterprise, stressed how banks can become more accessible for their customers through machine learning and AI technologies.

The Manila Leg of the ABF Retail Banking Forum was held on 2 May 2019 at Makati, Shangri-La, Philippines. For inquiries, please email [email protected].