RCBC chief pushes tech use in banking

MANILA, Philippines - Conventional or bricks-and-mortar banking is taking a backstage as technology is slowly taking over the proverbial over-the-counter transactions. 

That is the view of Rizal Commercial Banking Corp. (RCBC) president and chief executive officer Lorenzo V. Tan, as electronic and mobile technology is replacing human activities.

“If you can gamble through the Internet, why can’t you do banking through a Internet-enabled television set, an automated teller machine (ATM), a laptop, a tablet, or a mobile phone,” Tan said.

 The use of technology and mobile devices can reduce costs while increasing speed of transactions. And a bank that can exploit technology to compete on cost efficiency and speed, will provide a lot of value to its clients and stakeholders, Tan said.

“If I can reduce, say P1 per transaction through electronic and mobile technology, I would be saving our clients P0.50, and passing on P0.50 to my stakeholders,” he added. 

In contrast, one new branch could cost over P20-40 million while taking at least 18-24 months just to break even, resulting in a drag on the earnings of a bank. 

RCBC presently operates 421 branches nationwide. 

But Tan said that the growth of bricks-and-mortars (branches) would be outpaced by the migration towards electronic channels.

 Just consider these facts. It will cost the bank around P25 per transaction to use a teller, P12.50 for a call center, P5 to use an ATM, but only P0.25 to use an Internet.

But bank branches will still have its use albeit in a shrinking fashion. 

The RCBC chief executive pointed out that 71 percent of the country’s population is less than 35 years old, and 56 percent is less that 20 years old. 

“The 20 year olds do not buy newspapers, and they will have no use for checkbooks,” Tan said. “I am investing in the future say 10 to 15 years down the road, and I have to develop distribution channels for the Facebook generation.”

 Most of the young generation will likely go to a bank branch to open an account, seek some advice, and then “disappear” preferring to continue their banking relationship through the ATM, through their credit or debit cards, through their mobile phone, or through the Internet.

In the United States, bank branch transactions used to average 4,000 a day. Now it is down to 300. Banks are now closing branches, while opening more ATMs in convenience stores, malls, and practically every street corner. 

The International Telecommunications Union (ITU) said that close to 2.5 billion people use the Internet and roughly 600 million come from the developing nations. 

There are also estimates that the number of mobile phones will equal the world’s population sooner than later. And that tablets will soon outpace laptop production and distribution. 

Mobile phones are now being transformed into electronic wallets, and one of the biggest users are micro-businesses and small and medium enterprises (SMEs) worldwide.