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For banks, digital is way to go as market evolves

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By Karl Angelo N. Vidal

PHILIPPINE banks should digitize processes and their business in order to remain relevant amid disruption caused by financial technology (fintech) as well as operational challenges, bank officials said on Wednesday.

In the 2018 Retail Banking Forum held on Wednesday that was organized by Asian Banking & Finance Magazine, Union Bank of the Philippines, Inc. President and Chief Executive Officer Edwin R. Bautista said lenders in the country should operate as an “IT (information technology) company with a banking franchise” in order to keep up with evolving technologies that revolutionize the way the industry does business.

“By the time we become a digital bank, the issue is what if banking is no longer what it is today and our business model is no longer relevant? That’s how our transformation should be…”Mr. Bautista said, quoting UnionBank Chairman Justo A. Ortiz.

“In order to address that, we need to be an IT company with a banking franchise.”

Rizal Commercial Banking Corp. (RCBC) Head of Digital Banking Margarita B. Lopez shared this view, saying that going digital should no longer be treated as just an isolated endeavor.

“Digital is no longer a channel or function. It’s already a fiber by which we should define our business models or even our approach to collaboration so we may remain relevant and useful and each one has its own play on who to partner with,” Ms. Lopez said.

Mr. Bautista cited application programming interface, data analytics, robotics, artificial intelligence and blockchain as technologies that banks should embrace in order to keep up with the times.

“Market developments are forcing banks to hire technology to remain relevant to the customers,” Mr. Bautista noted.

“The internet and mobile devices you all have are changing customer habits, and so we must respond.”

While some lenders remain wary of financial technology “eating their lunch and eventually wiping them off the face of the Earth,” Mr. Bautista said banks still have an unquatifiable prime asset: the customer’s trust.

“Technology is something that is widely available to everyone. We actually have the advantage of customers trusting us. If we’re able to transform this, and combine fintechs with our innate advantages and assets… we might still win the war.”

Despite technology changing the way people bank, some senior bank officials in the same forum wondered how far change can go across the country.

Philippine Savings Bank Vice-President Jose Martin A. Velasquez noted that continued use of analog mobile phones as well as poor, limited Internet connection in the Philippines limit the reach of banks’ digital initiatives.

“That’s one major challenge when you want to roll out certain services digitally,” RCBC’s Ms. Lopez noted.

“Even if those smartphones can get there, we still need to have those signals strong enough.”

She also noted that the country’s lack of a national identification system — long advocated but never enacted due to the “Big Brother” specter critics raise — hinders lenders’ efforts to deliver certain digital services.