INTERVIEW: PHILIPPINE DIGITAL FINANCE
Building successful digital banks in the Philippines
Get it right on the first try or fade under a bad reputation, warns Jumio Asia VP Frederic Ho.
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he Philippines’ banking and finance industry has fully immersed itself in the digital race, a run fueled by the local regulator Bangko Sentral ng Pilipinas (BSP) recently handing out digital-only bank licenses. Even earlier, the financial regulator outlined an ambitious target that aims for banks to have 50% of their transactions done via electronic media by as early as 2023. With six new digital bank players to soon make their debut in the country, the digital battle is at its most intense. Even the most trusted banks face having to start over from scratch in building up their digital channels. “Building a digital channel is akin to creating a whole new brand. When we needed a particular service where business was conducted face-to-face, our heart leads us to a particular financial institution because of the trust we have in the brand,” Frederic Ho, Vice President of Jumio Asia, told Asian Banking & Finance in an exclusive interview. “Creating the equivalent branding capacity is important for the digital channel. “Just one other point, I cannot emphasise more in terms of getting this right at the go. The moment a brand is launched digitally, the quality of the user experience at that moment will mark how the market receives the product over a longer period of time,” Ho said. What is the current state of Philippine banks’ digital transformation initiatives? An important factor in the Philippines’ digital economy is the mobile revolution. In 2020, the Philippines achieved up to 70% smartphone penetration. So the reach given by the digital channels has now, via a mobile device, overcome some of the problems and restrictions in the Philippines’ business landscapes. For example, the geographic nature of the Philippines itself—with the population spread over a large area—and the accessibility to a bank branch outside the city areas may not be that convenient. These factors have been recognised by the regulators like Banko Sentral ng Pilipinas (BSP). The government is creating programs, legal frameworks, and initiatives to encourage the digitisation of banking services. It has led to a great level of activity in 2019-2020. The traditional banks, themselves, are upgrading the market. We have this app that was launched just over a year ago by RCBC Bank. There’s Komo from EastWest Bank. Of course, there are the new licensed digital banks that have entered the market under the purview of BSP inviting digital-only banks like Tonik or Uno Bank. So we see that there is a lot of excitement to participate in this big growth area of digital banking in the Philippines. 20 ASIAN BANKING AND FINANCE | Q4 2021
Building a digital channel is akin to creating a whole new brand – Frederic Ho, Vice President of Jumio Asia
Creating the equivalent branding capacity as traditional channels is important for digital channels
What are the things that banks and traditional lenders are getting wrong when it comes to digitising their services? I think that a lot of the planning and decisions for traditional micro-financing, lending businesses are trying to dominate the digital channel in a way that the culture and user experience is not the same as what we are used to in the past. Of course, everyone speaks of speed, convenience, and all these have got to be efficient and transparent to the applicant, simply for the fact that there are so many choices today. The task then is to have them perform something simple, and also to cover as wide an identity document available in the market as possible. In the Philippines, for example, there are many official documents. The ability to process these, approve them in a quick simple way, has become an important part of designing the user experience, which ultimately leads to the success factors behind lending, remittance as they design their customer acquisition strategies. Getting the whole design and the user experience correct will be critical in terms of how that product and that brand can secure their objectives, be it market share, brand status, user reviews, or maybe having a long-term strategy about where the product will scale to deliver that
