UnionBank investing P1.8 billion in digital banking arm

MANILA, Philippines — Union Bank of the Philippines is infusing an additional P1.8-billion capital to support the ongoing business operations and sustain the expansion of UnionDigital Bank Inc.

The additional capital infusion in its digital banking arm was approved by the board of directors of the Aboitiz-led bank last Nov. 24.

“Please be informed that the board of directors of UnionBank, at its meeting held on Nov. 24, approved the infusion of additional capital of up to P1.8 billion in UnionDigital Bank to support ongoing business operations and allow it to deliver sustainable growth,” the listed bank said in a disclosure to the Philippine Stock Exchange (PSE).

Last June, UnionBank also beefed up the capitalization of its digital banking unit through the infusion of P900 million in additional equity.

The Aboitiz-led bank also injected P2 billion in additional capital to the wholly owned subsidiary in June 2022.

UnionBank is moving toward high frequency lending, with shorter payment periods to boost its loan portfolio and include more Filipinos in the banking ecosystem.

On the sidelines of the recent Singapore Fintech Festival, UnionDigital Bank president and CEO Henry Aguda said the financial institution aims to double its current P12 billion loan portfolio as it introduces products meant to tap Filipinos who do not have access to formal credit.

Aguda said UnionDigital targets to make lending configurable where borrowers can pay in a shorter period of time. As of now, UnionDigital offers loans that can be paid in months.

UnionDigital Bank is one of the six entities granted digital banking licenses by the Bangko Sentral ng Pilipinas (BSP). The Monetary Board also granted digital bank licenses to UNO Digital Bank, GoTyme of the Gokongwei Group and Tyme, Maya Bank of the PLDT Group, Overseas Filipino (OF) Bank of state-run Land Bank of the Philippines and Tonik Bank.

Unlike brick and mortar banks, digital banks have no physical branches and their financial products and services are processed end-to-end through a digital platform or electronic channel.

Aside from offering traditional savings and time deposit accounts, digital banks also improve the access of micro, small, and medium enterprises (MSMEs) to credit through mobile-friendly lending and investment facilities.

Under its Digital Payments Transformation Roadmap, the BSP aims to shift 50 percent of total retail transactions in the country to electronic channels and onboard at least 70 percent of Filipino adults into the formal financial system by 2023.