By Lee C. Chipongian
Aboitiz-led Union Bank of the Philippines (UnionBank) has become what it said it will do: Be the country’s most innovative bank and a leader in digitalizing financial services for the mobile and online public.
UnionBank is not the largest bank in the Philippines. Based on assets and deposits-size, it’s the 9th biggest. It is 8th in terms of capital base and the 10th in lending activities.
In the digital world, however, it is No. 1 in the country, based on accolades the bank has gathered in the last two years.
Bank CEO and president, Edwin Bautista, had planned it this way, pursuing aggressive technological and digitalization programs that will be more advanced than the bigger banks with the wider networks.
Bautista has said that the bank, under his watch, will respond to the digital age, communicate with the millennials and more significantly, create the needed digital services for the sophisticated banking clients. In the last several years, they have invested spectacularly in technology and IT, certainly more than any bank in the Philippines, allotting a huge portion of its budget for digitalization, or as much as P3 billion-P4 billion a year. It spends more to secure its IT systems from cyber-related crimes, at par with the much larger banks.
Bautista, who became bank CEO in 2016, remains confident that the digital and technological advancement is being implemented successfully and they are poised to launch more innovations such as blockchain technology.
In 2017, UnionBank was already known as the “best” digital bank in the country, based on honors and awards that it has received and could expect to receive in the next years. The year before, it set up a digital bank branch, The Ark, a futuristic teaser of what banking will be in the digital era.
UnionBank – which is the first bank here to offer an online banking service – also has the EON (“EON For the Digital Me”), a digital banking platform which has its roots in the bank’s first electronic savings bank account introduced 17 years ago.
According to UnionBank, it was also a pioneer of the face recognition technology in lieu of traditional passwords and this paved the way to its creation of “Selfie Banking” using EON.
In areas of innovation, it has already transformed its credit card business and enhanced its “smart banking” customer experience through creative applications.
Bautista early on has said that to carve out a prominent position in the digital banking space, they need to work closely with the fintech (financial technology) sector rather than compete with them. The bank’s “OpenAPI” platform which allows connection to the bank’s backroom services, is proof of this strategy.
“UnionBank aims to be embedded into the applications, products and services of these fintechs and other entrepreneurs, which in turn get delivered to the rest of the Filipinos,” the bank said earlier. It added that “digital transformation is best achieved when it enables its end-customers to consume new services that will emerge from the many partnerships that are to be likely to be struck between the bank and the rapidly expanding fintech community.”
UnionBank, as of end-September 2018, booked a lower P6.1-billion net profit compared to same time in 2017 of P6.4 billion. Still, it is considered a profitable financial institution and it has a healthy capital base. Its total assets were up almost 13 percent year-on-year while its loan portfolio increased 18 percent.
Bautista said the bank is on track in their digital transformation. He has said that the industry and the market has taken notice of their strides, and that they are set to launch more innovations and become pioneers in several fields of banking business.
Late last year, the bank already has a blockchain-based platform for its internal use. It is again, a first in the industry.
Above all else, UnionBank is utilizing technology in the name of inclusive growth.
Bautista said that the bank’s Project i2i – another blockchain initiative in collaboration with rural banks — is already recognized as a game-changing endeavor in as far as promoting financial inclusion is concerned.
Launched last year, Project i2i which is a real-time and cost-effecive retail payment system, is expected to bring the millions of unbanked Filipinos into the fold by enabling rural banks to connect with financial networks.
UnionBank chairman Justo A. Ortiz, also chairman of the Blockchain Association of the Philippines, first announced the blockchain initiative in a New York blockchain summit in 2018.