Digital-ready bank frontliners and the future of banking

I once again had the pleasure of moderating a stellar panel of experts from the banking sector. It was almost exactly a year ago that Stratbase ADR Institute brought together regulators, the banking sector, and technology experts to discuss the importance of building trust and security to drive digital financial inclusion in this era of accelerated digital transformation.

With an increasing number of Filipinos realizing the benefits of technology and as the country’s economy opens up more and more, the institute wanted to revisit this vital discussion through a virtual event focusing on digital readiness for banking frontliners. 

According to the Bangko Sentral ng Pilipinas, the number of Filipinos with access to banks and electronic money channels is up to 41 million as of the third quarter of 2021. From just 21 million in 2019, BSP Governor Benjamin Diokno said another 20 million have since been “onboarded.” 

The most significant chunk, or 84% percent of these newly onboarded Filipinos, are e-money users. Indeed, the pandemic has emerged as a catalyst for the growth of digital payments acceptance. An increasing number of Filipinos, in turn, are seeing the benefits of having an account to perform digital payments.

While there may be no turning back from this pandemic-induced digital awakening, changing COVID-19 alert levels could further evolve how Filipinos transact. With Metro Manila and other areas now under alert level 1, mobility restrictions have been relaxed, and more Filipinos are heading out, some to their bank.

With these recent developments, it is clear that Filipinos enjoy the benefits of digital banking, but at the same time, face-to-face banking at the branch still has its place. It seems increasingly likely that it’s a hybrid of online and in-branch banking that we’ll need—one where customers have the same seamless and secure experience, regardless of how and where they bank. 

This means banking institutions and the Fintech sector need to remain innovative and agile. They need to ensure both the technology infrastructure they use are in place and that banking employees are sufficiently trained and ready to keep up with evolving demands and challenges.

During our recent virtual event, Noel Santiago, Chief Digital Officer, Bank of the Philippine Islands (BPI), said that beyond technology, addressing challenges with culture and people is crucial.

Santiago said, “the biggest challenge we are grappling with right now is our client adoption of the digitalization of the economy is faster than our own labor force in dealing with them.” To address these challenges, he said they were slowly developing this capability by retooling technology infrastructure, reskilling employees, re-engineering processes for digital engagement, re-engaging clients on a digital front, and reimagining the customer experience and journey.

From the technology sector, Kshitij Gopal, Modern Work and Security Lead at Microsoft, said that in this remote working world, industry, government, and customers need to ensure that information is protected, regulated, and guarded.

“The reality is that the future of all our financial services, me as a customer, you as a bank, the regulators, all of us depend on investing in frontline workers, with security and compliance as top of mind,” Gopal said. 

He also emphasized the critical role thank banking frontliners play in ensuring security. He said that “Security, top of mind, and making sure that when you think about frontline workers like making sure they have access to the most sensitive data that your organization has.”

Melchor Plabasan, Director, Technology Risk and Innovation Supervision Department, Bangko Sentral ng Pilipinas (BSP), echoed the sentiment that ensuring the digital readiness of the banking sector is a multi-stakeholder initiative.

“The journey towards open finance is not solely for the BSP; it’s a shared undertaking or shared responsibility with the entire financial services industry. In terms of the governance structure, we have moved to a create structure that is largely led by the players themselves,” he said.

Plabasan also said that  “being ready, particularly in this digital universe, shouldn’t be viewed as a single point in time perspective. Given that technological innovations move quickly, we must always be on our toes to ensure that we keep in step, staying light and nimble so that we are able to fulfill our mandates.”

Stratbase ADRi President Dindo Manhit also noted, “the growth of the digital economy through e-commerce, fintech, and digital banking has become the cure to many of our financial ailments. But as frontline workers have gone digital, many lack the readiness for optimal and safe use of digital technologies.”

However, he pointed out that the “digital divide,” or the unequal access and use of digital tools and services, is one of the challenges we have faced since the pandemic hit in 2020. Despite the growth of the digital economy and banking. Prof. Manhit said, “We need the spirit of fostering a digital environment that empowers the whole of Philippine society, rather than one that divides.”

Indeed, innovation and technology adoption are moving at a scarily fast pace. Policies and regulations must be able to keep up so they can sufficiently protect the interest of Filipino users while not suppressing technological innovation. At the same time, policymakers and the banking and technology sectors must work together to ensure the benefits of innovation are inclusive. This means more than just having the latest technology infrastructure, but also continuously reskilling frontliners, improving processes, and enhancing customer engagement.

Paco A. Pangalangan is the executive director of think tank Stratbase ADR Institute.