UNIONDIGITAL Bank, the digital lender of UnionBank of the Philippines, Inc., recorded P4.8 billion in loans and P9 billion in deposits just five months after its commercial launch and sees continued growth this year on expectations of improved demand for credit.

UnionDigital Bank President and Chief Executive Officer Arvie de Vera said in an e-mail interview with BusinessWorld that the “record-breaking” numbers seen as of November 2022 came in cooperation with its parent lender.

“We are parented by UnionBank, who has a 40-year-old track record in banking, financial services, and lending. As well as being grand-parented by the Aboitiz Group, a 100-year-old ‘techglomerate’ who has deep roots in various ecosystems and participates in various value chains,” Mr. De Vera said.

“It’s really an ‘unfair’ advantage because we, and only we, have access to these potential customers and are able to maximize the data within the group, part of which are a lot of underserved customers — whom we decided to tap first,” he added.

UnionDigital is the listed lender’s digital bank and was granted a license by the Bangko Sentral ng Pilipinas in July 2021. It began operating in July 2022.

Mr. De Vera said the digital lender was able to harness its parent’s “decades of deep financial data,” allowing them to target UnionBank’s underserved segments.

“Unlike other lenders who are trying to lend based on new data, trying to determine their capacity and willingness to pay, we take a more sure path to lending by using existing transactional data,” he said.

“This, together with the ability to use new and innovative banking underwriting models where we can apply and monetize all the data we have, contributed to our success and growth so far.”

Asked what trends the digital bank has seen among customers in the first five months of its operations, Mr. De Vera said there is growing preference for efficiency and faster services that only financial technology or fintech players have been able to provide. 

“People want things faster. They want things more immediate, more cost-effective — an overall better customer experience. They want things more digitally enabled rather than paper-based, not manual and one-size-fits-all. It’s about being more personalized, really,” he said. 

“Before, traditional banks could only lend based on income or collateral. Now, you can use alternative sources of data to determine someone’s willingness and capacity to pay — and this became possible because of the digital transformation,” he said.

He added that digitalization is an enabler of economic growth, as it allows people to transact more efficiently.

Mr. De Vera also said more digital tools are accessible now, which have enhanced security to prevent any illicit banking activities online and boost volume growth and usability.

“As a digital bank from day one, we have a better starting point for security and to prevent fraud. Our orientation is immediately on cybersecurity, whereas traditional banks have to pivot to that. We have embedded within us a world-class digital security program, complete with cybersecurity controls into the customer online experience,” Mr. De Vera said.

Some of the tools that the digital lender uses to protect its clients are multi-factor and risk-based authentication, encryptions, threat aware apps, text message or e-mail alerts, as well as fraud and anti-financial crime monitoring, he said.

This year, UnionDigital is looking to offer more loans to its clients, the official said.

“Our strategy focus would really be to lend and maximize the learnings we get from our ecosystem. This is really the main point of financial inclusion and of a bank — to lend and to have a balance sheet,” Mr. De Vera said.

“Since we already have a successful loan growth portfolio to date, we plan to continue and focus on this [this] year. At the core of a digital bank should be the ability to lend,” he said.

He added that despite elevated inflation, the bank is expected to sustain its growth this year because of the economy’s rebound.

“We really see that loans are going to be our driver, not just in terms of profitability but also in terms of focus and growth. It’s with the challenging 2023 environment, not just in the Philippines but globally, that we’re even more encouraged to focus on loans — because loans generate revenues and actual profit — and that’s more sustainable,” he said. 

“We don’t want to waste our resources on things that will not bring us revenue. We want to focus our capital on where we can earn the most revenue because it will drive profitability and sustainability to allow us to scale for the future,” Mr. De Vera added. — Keisha B. Ta-asan