RCBC
Enabling Financial Inclusion with FinTech Innovation
IN ASSOCIATION WITH:
DIGITAL REPORT 2021
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ENABLING FINANCIAL INCLUSION WITH FINTECH INNOVATION
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Lito Villanueva, Chief Innovation & Inclusion Officer at RCBC, discusses how digital innovation drove financial inclusion during COVID-19
Lito Villanueva, Chief Innovation & Inclusion Officer
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here's a conundrum in the Philippines that often halts the flow of progress: ‘We want digital transformation, but we don’t have 100% internet penetration or data access especially in the countryside’, says Lito Villanueva, RCBC Executive Vice President and Chief Innovation & Inclusion Officer. Pre-pandemic, 71% or 51 million adult Filipinos were unbanked, and only 10% used digital banking, according to the 2019 Financial Inclusion Survey published by the Bangko Sentral ng Pilipinas (BSP), the country’s central bank. ‘Many Filipinos already have little or no access to brick-and-mortar banking’, Lito says. ‘It takes so much effort that banking is the least of a low-wage worker’s concerns. They’re worrying about surviving day-to-day, instead of opening a bank account’. This is partly due to the geography of the Philippines. As an archipelago with more than 7,100 islands, many geographically isolated and disadvantaged areas (GIDAs) are hard to reach. ‘Even being known globally as the most social media-savvy users, most of our islands are still not digitally connected’, says Lito. ‘But while the pandemic highlighted the importance of digital banking, it also underscored that we don’t need to have 100% of the resources at hand before driving transformation. We learned that it is a process, a journey which we can improve as we go along’. Pandemic-Era Banking With enforced physical distancing, due to the pandemic, Filipinos found that in-person transactions were nearly impossible.
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“ When banking services are able to present how they are relevant to these families, it becomes easy to onboard the unbanked and the underserved into the formal financial system” LITO VILLANUEVA
EXECUTIVE VICE PRESIDENT AND CHIEF INNOVATION & INCLUSION OFFICER, RCBC
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‘Physical banking, as we know it, mattered very little in the face of a disruption as huge as the COVID-19 pandemic’, Lito says. But this situation further marginalised the underbanked and underserved. ‘Though digital transformation was therefore inevitable, it did not simply mean moving our services to a digital platform. It also required fostering and strengthening strategic collaboration so we could continue to reach and serve our customers’. Right at the start of the pandemic, RCBC led the first massive private initiative in order to disburse government aid to Filipinos nationwide. As of June 2021, the Bank has distributed in excess of US$319.9m (PHP16.13bn) in governmental financial aid to more than 4.5 million low-income families. That’s 22.83 million individuals in 73 out of 81 Philippine provinces.
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‘The fact is, digital transformation and financial inclusion go hand-in-hand’, Lito explains. ‘Pushing for digital transformation requires financial access for all, through innovative solutions powered by digital’. Going Digital So far, the results have been impressive. In June 2021, RCBC’s InstaPay and PESONet transactions increased by a respective 118% and 579% from last year. Cardless ATM withdrawals through its mobile app grew by 360%. In fact, during the pandemic, the bank onboarded more than 1.4 million customers onto its digital finance platforms. Starting with one per cent digital in 2015, the Filipino banking industry had aimed to reach 20% digital by 2020. Now, BSP predicts that by 2023, it will digitalise 50% of its transactions. That brings the country closer to its goal of including 70% of adult Filipinos in the formal financial system within the next two years. ‘We revved up our online and mobile platforms,’ Lito says. ‘With health protocols in place, we created contactless transaction options in both the RCBC Online for our techsavvy customer and DiskarTech app for the tech newbies. No need for physical banking’.
6,003
Number of employees.
US$339mn Revenue (Php 17.117 bn)
TITLE: E XECUTIVE VICE PRESIDENT AND CHIEF INNOVATION AND INCLUSION OFFICER INDUSTRY: BANKING LOCATION: PHILIPPINES Lito Villanueva is the Executive Vice President and Chief Innovation and Inclusion Officer for RCBC. Mr. Villanueva also serves as the Chief Digital Transformation Advisor for the Yuchengco Group of Companies. Concurrently, he is also the founding chairman of Fintech Alliance.ph. Mr. Villanueva is the Philippines’ leading and award- winning thought leader on digital transformation and inclusive digital finance. Recently, he was named at the Innovation in Digital Banking Awards 2021 as the Chief Innovation Officer of the Year by the "The Banker," the prestigious, Financial Timesowned international monthly publication on financial affairs. He has over 20 years of experience in banking, telecommunications, payments, development finance, advisory, and financial technology. He is merited with over 60 global and regional awards, including being named one of the Top 100 FinTech Leaders in Asia and "Mr. Fintech of the Philippines" by BizNewsAsia.
EXECUTIVE BIO
1960
Year founded
LITO VILLANUEVA
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“ All segments of clients—from the mass affluent to the mass low-income market, the urban and the rural, the boomers to the millennials and the Gen Zs— are willing, even enthusiastic, to try new technologies” LITO VILLANUEVA
EXECUTIVE VICE PRESIDENT AND CHIEF INNOVATION & INCLUSION OFFICER, RCBC
Here’s a quick rundown of some of the digital tech RCBC utilizes to push for financial inclusion: • Cloud: This is the cornerstone of digital. It allows RCBC to launch banking apps and services with speed and scale
‘The most effective technologies are those that make onboarding easier and attend to the needs of customers 24/7’, says Lito. ‘As personalised banking spikes, we need to make transactions frictionless, ready at warp speed, and available all day, every day’. Driving Financial Inclusion A major barrier to banking, especially digital banking, is language. ‘Traditional banks tend to intimidate lowincome customers with the way they present banking and the language—especially the banking jargon—that they use’, Lito explains. This leads to a divide. ‘Most traditional banks that pivot to digital still maintain the intimidating brand they project in their brickand-mortar branches. But on the other hand, digital-first banks tend to target the digitallysavvy, young Filipinos that know the ins and outs of technology’. These tactics push away unbanked customers and make it more difficult for them to join the formal financial system. RCBC’s approach, through Lito’s team, was to streamline its digital platforms and make everything as intuitive as possible to ensure that all clients are served, across all segments.
• AI/ML: This bridges communications with customers and helps RCBC develop more responsive and hyper-personalized banking solutions • Facial Recognition Software: It onboards banking clients quickly and securely. • eKYC (Know Your Customer): This further strengthens data privacy • Chatbots: These enable digital banks to answer customer questions and process them much more quickly, 24/7 rcbc.com
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DISKARTECH IN NUMBERS
4.2mn+ Downloads
3.01mn+ Registered users
1.3mn
DiskarTech Basic Deposit Accounts (BDAs)
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Highly active users live in remote areas
DISKARTECH’S GROWTH IN QUARTER 2 – 2021 Average monthly BDA growth increased by
23%
Average monthly Deposit Size growth increased by
21%
Usage Volume on Q2 grew by
163%
Usage Value on q2 grew by
388%
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‘We have RCBC Online and Mobile for the digital-savvy Filipinos, the ATM Go for those in remote areas, and DiskarTech for the unbanked and underserved, who are willing to try digital but are typically shut out of traditional banking’, Lito says. ATM Go RCBC’s solution for remote areas, its ATM Go option, is a handheld mobile neighborhood ATM. They rely on mobile point-ofsale (mPOS) devices that are deployed in partner retail stores, cooperatives, microfinance institutions, rural banks and other community establishments that rural community members can access to make cardless transactions within their area. To bring banking closer to them.
“The most effective technologies are those that make onboarding easier and attend to the needs of customers 24/7” LITO VILLANUEVA
EXECUTIVE VICE PRESIDENT AND CHIEF INNOVATION & INCLUSION OFFICER, RCBC
DiskarTech DiskarTech is RCBC’s primary financial inclusion super app. In addition to eliminating jargon, it reduced the language barrier: the app’s user interface uses Taglish or the Filipino-English vernacular to explain its features, and now also in another major dialect, Cebuano. This allows the app to be more relatable and accessible to the mass market. It also offers one-stop financial solutions in a ‘sachet-type’ or trial package, such as, microfinancing, micro-insurance and even livelihood opportunities. rcbc.com
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“ While the pandemic highlighted the importance of digital banking, it underscored that we don’t need to have 100% of the resources at hand before driving transformation” LITO VILLANUEVA
EXECUTIVE VICE PRESIDENT AND CHIEF INNOVATION & INCLUSION OFFICER, RCBC
DID YOU KNOW...
Lito explains that, in the Philippines, most customers have financial goals that revolve around their families. So his team concentrates on showing people how banking can help provide a better life for them and those they love. Once individuals find this what—a better home, security, and opportunities for their families—relevant to their values, they’re eager to understand the how or specific ways banking can improve their lives. And if one family member starts to value banking and digital banking, others usually follow suit. ‘This is especially true in remote areas’, Lito says, ‘where families rely on each other to help uplift their lives’.
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THE RIZAL BRAND OF LEADERSHIP 1. 2. 3. 4.
Resilient Management Inspired Empowerment Zhooshing the Workplace Amplified Listening and Communication 5. Levelled up Teamwork
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At present, DiskarTech has more than 4.2 million downloads and over 3.01 million registered users—and eight out of 10 of its most active users are from more remote provinces. ‘Yes, they had to shift to mobile banking because of the pandemic’, Lito says. ‘But if we remove the barriers that make traditional banking intimidating, they’ll continue to use it’. Since his team launched DiskarTech, it’s successfully reached the most customers out of any Filipino bank through a digital platform and served customers from all 81 provinces. Giving Access to the Unbanked While there’s no data yet for the past year, the
number of banked adult Filipinos is steadily rising. The region’s most recent financial inclusion survey in Q1 of 2020 showed that from 2017 to 2019, the number of Filipino adults with formal financial accounts increased 6%—which translates to five million new customers. ‘The banked population of the Philippines continues to grow in number’, Lito says. ‘The BSP’s digital acceleration initiatives and our efforts have paid off’. • Digital banking continues to grow: Total deposits grew by US$24.2 billion in a single year—from US$270.7 billion (PHP 13.648 trillion) to US$294.9 billion (PHP 14.869 trillion).
• More Filipino customers are saving money: In September of 2020, deposits increased by 3.86%. Lito looks up. ‘What we’ve learned across all segments of clients—from the mass affluent to the mass low-income market, the urban and the rural, the boomers to the millennials and the Gen Zs, is this: they are willing, even enthusiastic, to try new technologies - as long as we make it simple, easy, and accessible for them’.
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