Bunye: Bank of the Philippine Islands - digital frontrunner

BANK of the Philippine Islands (BPI), the oldest bank in the Philippines, continues its tradition of notching many "firsts" in the industry.

Over the past 60 years -- spanning the Mainframe Era (featuring IBM and supercomputers), the Self Service Era (characterized by the ATMs) and Experience Era (during the advent of the smartphones) -- BPI has been front and center in banking technology.

In today's digital age, the 167-year-old bank intends to do no less.

According to President/CEO Bong Consing, BPI has over the last three years started building its foundational digital infrastructure designed to build capacity and capability in new cutting edge ways.

The intended results are increased security, increased business volume, improved turnaround time, and enhanced customer experience.

The objective, according to Consing, "is to make the experience of BPI clients seamless as they move from physical channels, like our branches, to our digital channels, like BPI Online and BPI Mobile."

"Our digitalization will allow for an omni-channel experience, with clients being able to start a transaction in one channel and complete it in another," Consing added.

"Digitalization will empower our clients as they will be able to bank with us at any time wherever they may be, and in a manner that is responsive to their particular requirements," he said.

Already, the first phase of digitalization has supported a 13.8 percent average annual increase in transaction volumes over the same period, Consing said.

Further, Consing said digitalization will provide more impetus to the bank's thrust towards financial inclusion.

"Digitalization will allow us to become more financially inclusive by significantly increasing our engagement with segments of the market where the banking system as a whole is woefully under-represented.

"These are small and medium scale companies (or SMEs) and the lower-middle and lower-income customer segments."

Consing cited the case of BPI Direct BanKo, a wholly owned subsidiary, whose clients will benefit significantly from digitalization.

BanKo caters to self-employed micro-entrepreneurs (SEMEs), such as public market stall operators, and operators of beauty salons and neighborhood bakeries.

BanKo makes loans to self-employed micro-entrepreneurs such as a stall operator in a public market, a beauty salon operator, or a neighborhood bakery.

In its short history, BanKo has made over P4 billion in loans to almost 60,000 entrepreneurs.

Of course, the implementation of digitalization is not without its problems.

"A useful analogy," according to BPI Chair Jaime Augusto Zobel de Ayala, (Jaza) "is one where you decide to fundamentally rebuild your house while still living inside.

"It can be unpleasant and many of our clients were (recently) inconvenienced in painful, abrupt and unexpected ways."

While expressing deep regret for the recent incident, Jaza expressed confidence that "we are over the painful hump and have completed the most difficult steps of our backroom upgrade."

That said, let us see how BPI performed last year despite a very challenging environment characterized by high inflation, weakened peso, and weak equity market.

BPI showed solid numbers across all metrics:

9.5 percent increase in assets (exceeding two trillion), 12.7 percent growth in loans, strong CASA ratio at 72 percent, all-time high loan-to-deposit ratio of 85.4 percent, revenue growth of 10.6 percent.

BPI also completed three major capital raising activities last year -- P50 billion stock rights offering (SRO), additional equity via a US Dollar 600 million international bond and a P25 billion domestic bond -- the largest in Philippine corporate history.

(Disclosure: This writer was an officer of BPI prior to joining government in 1986. He rejoined BPI as an independent director in 2016. He also sits in the board of BPI Asset Management and Trust Corporation, and BPI Direct BanKo.)

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