Going all-digital: A CIMB Bank Q&A

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By Carmina Angelica V. Olano

Vijay Manoharan
Vijay Manoharan, CEO of CIMB Bank Philippines

LAST MONTH saw the Malaysian-lender CIMB Bank formally launching its operations in the Philippines, more than a year after it received the central bank approval to establish banking operations in the country.

Prior to entering the Philippine market, CIMB Group has a network of branches in over 1,000 locations in Southeast Asia. By setting up shop in the Philippines, CIMB has completed its presence in the region.

Aside from Southeast Asia, the Bank also has coverage in China, Hong Kong, India, South Korea, Sri Lanka, the United Kingdom, and the United States.

The Malaysian giant is positioning to be the first “all-digital mobile-first” bank in the Philippines. Last Feb. 5, CIMB Bank Philippines, Inc. has formally launched its mobile application OCTO, to which local users can now open a deposit account without going to a physical branch. The bank has also partnered with retail and financial firms such as 7-Eleven, DragonPay, Visa and Bancnet to serve as touchpoints where clients can withdraw or deposit funds. Through these partnerships, the bank also aims to capture 100,000 retail clients within six months.


With these in mind, BusinessWorld sought out CIMB Philippines’ Chief Executive Officer Vijay Manoharan for his thoughts on the future of its full-mobile banking facility in the Philippines and how consumers will benefit from it. Below are excerpts of the interview.

What are the factors you considered in choosing to enter the Philippine market?

We looked at the demographics, the digital adoption, the maturity of banking and the whole combination of the young and old population. The [Philippine] population is very digitally inclined. There is a high level of Facebook and social media users, as well as its smartphone penetration growing in double digits.

We found that the banking landscape has not yet evolved to meet the needs of the digital segment. We found that coming here and doing a digital proposition will sort of be able to cater to the population that is looking for a different way of banking… And we hope to fulfill that missing space.

So we found that there is an opportunity to do something different. We also found that there is a segment of customers looking for something different from their banks. And we hope to fulfill that missing space.

In terms of digital adoption, majority of people carry a smartphone…So there is this affinity to use their mobile phones in their day to day lives. Similarly, people are getting more comfortable to transact in e-commerce, to book a ride, [and] to book services online. So we felt that they are probably ready to do their banking in their mobile phones.

We strongly feel that we are the first all-digital bank in the country. Our entire business model, our entire business proposition [is fully digital]. That is unique in this country.

The Philippine financial market is dominated by institutionalized brick-and-mortar banks, what is your strategy in establishing the CIMB brand in the country?

We just want to be known as the bank that offers the way consumers want to bank. For us, it is really giving the customer the experience that they want… [s]imple, easy, 24/7 providing them the best products, the best rates, having no fees [and] having easy access in their bank accounts…The way we want consumers to associate with CIMB is one that makes their banking experience simple, easy and convenient. We want them to think of us…as a brand that has transformed banking.

Based on our research, we found that… the market is ready given the smartphone adoption and the young population. We see the pain points consumers go through every day in doing day-to-day banking, having to go to a branch, park their vehicles, stand in line, and go through traffic. So why not create a new experience whereby you can do everything that you want but enable that in your smartphone 24/7. In this day and age where time is obviously limited, everyone values convenience, access and the ability to control their lives. We are trying to give it back. This is a different way of how you can do your banking.

In terms of reach, because we do not have to be present in a certain location, consumers can connect with us almost anywhere. By just downloading the app, they are able to open an account remotely in 10 minutes. So our banking products and services are accessible almost anywhere in the country… provided there is data connectivity or internet.

In addition, we have a network of partners that is present all over the country. This network of partners will also be able to facilitate banking transactions on our behalf.

What is your edge in operating as a digital bank?

The experience is our edge. The experience on how we are able to get you on boarded, have an account established and manage your account in a manner of few clicks. So our edge is really giving an unmatched experience in making banking so simple, intuitive, and easy for the consumer. This is what we would like to believe the consumers are looking for.

Our products offer the best interest rates in town, we do not charge any fees, and have no maintaining balance. All that to really make banking simple, less stressful, and less intimidating. Hopefully, the consumer will say now there is a bank that is really trying to simplify almost every element of traditional banking experience.

Through digital, we are able to do this. It is like back in the days if you book a flight ticket: you go to a travel agent, sit down book a travel ticket, work with someone to look at the schedules, look at the flight details, etc. These days you just go online and book a ticket. So digital enables a lot of stuff that are previously not accessible.

Of course, going digital does not necessarily means less costs. There is a huge amount of investments that we make to have a robust digital platform. But definitely, we are expecting to save on other things, like… not having traditional, brick-and-mortar branch presence across the Philippines.

Every investment we make in technology, we know it will pay back in the long run because it would give us that cutting edge experience. Experience is our differentiator. Our opinion is that consumers want to move away from going to a branch… We intend to invest where the future is going to. Henceforth, we are planting the seed to be well positioned in the future.

Do you plan to introduce next generation technologies (i.e. artificial intelligence, internet of things, biotechnology) in your banking processes?

We must always re-calibrate banking and look where the Philippines is set. Right now, the starting point is we are at the very basic levels of technology advancements and digital adoption. We definitely have a road map to introduce artificial intelligence, big data, and chat functionalities using bots. We want to introduce them, but are mindful to do it at the right time. We do not want to shock the system.

I think the consumers need to first get comfortable to do their banking online. To get security right, to make them feel that banking on their mobile phone is safe and secure. That is the most important thing, before we think about next generation technologies. The first stumbling block is to make consumers feel that banking with their mobile app is just as safe, if not safer, than walking into a branch and dealing with a banker.

By going digital, who are your target markets?

Anyone who has a smartphone… no matter how young or old you are. If you are a consumer that values your time and convenience, and you want to get more from your bank, you should come and bank with us. The common thinking is that we only appeal to the young or below 30 years old. That is a bit of a fallacy.

We look at mobile users, smart- phone users as our early adopters. We talk to a broad base segment. Our early indications tell us that not just the young segment are attracted to us, even the older ones are open to banking with us.

With e-commerce transactions growing leaps and bounds, people are becoming more comfortable to transact online. All these will need consumers to be more confident to do more things online. Banking is right there, the rest will follow.

How would you describe a seamless digital banking experience? What should be the capabilities of a bank in order to provide such?

Our DNA is to get everything done in 10 minutes. For us seamless is: everything is in your fingertips… Everything is intuitive, which means you on your own can self-navigate and self-learn.

You have to have a lot of focus on consumer experience. To achieve this, you really must see it from the outside. You must develop your processes, design capabilities exactly to what the consumers are asking from you. It is very easy to fall in the trap of designing the way the bank wants… but it is really to design a process and experience that is for the consumer. Sometimes, you co-develop them with the consumer.

Through market research, we engage consumers formally and informally, through focused groups, through various means and methods to understand the pain points, what they are looking for, and to understand how they feel. And we try to solve these.

How does your collaborations and partnerships work?

We partnered with various companies for various purposes. Some of these partners give us the reach and convenience for customers. For example, customers will need to cash in, make a payment, and do withdrawals. These partners will enable them to do so. [Although] we are an all-mobile bank, we understand that consumers still need cash. We partnered with Bancnet so they can withdraw from all ATMs across the nation for free. With 7-Eleven, customers can cash in or deposit their funds. With Visa, we are able to issue debit cards, which allows customers to make cashless payments in any terminals, both domestic and international.

Through our partners, we are able to provide that added convenience. For CIMB customers, we do not usually charge them anything if they deal with our partners.

Why did you choose to partner with FINTQnologies Corp. (FINTQ)? What are the advantages brought by this collaboration?

To drive the digital agenda. We work with them to look into new technologies, to avail our products and services, and to reach more consumers. We want to promote digitization in the Philippines so we work together on how we can align our visions to help the consumers. It is more of a strategic partnership.

Aside from FINTQ, do you have other local partners? How does your collaborations work? What are your objectives in each partnership?

We have a list of partners that we had advance negotiations with, it will be communicated in the coming weeks and months.

We are constantly being approached as well as approaching potential partners in the Philippines. Many people are excited with the first all-digital bank. They see that we can bring significant value to their business and customers.

What are the products you offer in the local market? How different are they from existing banking products in the country? What are the benefits your users can enjoy when they open an account with CIMB?

For our deposit accounts and debit cards, we do not have fees; we pay super high rates (through its UpSave account which offers a yearly interest rate of 2%); and have no minimum maintaining balance. Plus, customers can easily access us through our network of partners. These are all value-back for consumers. It is a completely free account.

Similarly, we have enabled domestic fund transfers, as well as interbank transfers using Pesonet.

In 2019, what other products and services should we look forward to?

You can expect us to introduce a variety of loan products. We are looking to offer two types of personal loans by March to April, with a lending facility that allow clients to borrow funds up to P25,000, and another with a maximum of P1 million.

We are looking at other products but it is very early to say. We want to do a few things and do it really well. We have a product roadmap that we are currently evaluating on the subsequent products that will be relevant to the market.

In terms of cybersecurity, what are the measures you employ to protect your customers from online theft? How about your system, what are your measures to prevent data breach?

In CIMB, we operate across ASEAN, hence we are regulated by multiple central banks. So we comply with the highest standards of data, fraud and information security.

In terms of the technology, we constantly update, keep track of the latest and the best technology out there in order to ensure customer transactions are safe and secure. We are constantly looking for ways to improve.

If you want to transfer funds, you will be required a one-time password. You can set the limits of how much you will allow transfers. There are also other features like ensuring one app is tied to one device. So you cannot have the same username and password used in multiple phones. To deactivate a device, just call our call center.

Our data center is world class. There is an army pf people that protects the bank and our operations in 10 or more markets. We centralized our operations so we take the best practices and apply it to local markets.

In the Philippines there are still a lot of unbanked population, especially in rural areas. Do you also plan to tap them?

Yes, eventually. We will get to them, but in a phased approach.

We believe that we are a better option [for those who chose to remain unbanked because of previous bad experiences]. We are making banking so simple, easy and convenient, as well as free. This may give these people a moment to think about. Maybe they did not like the fees, the maintaining balance, and the low interest rates… we offer the complete opposite. So maybe they would think they would be better off banking with us because we provide what they are looking for.