Going digital

When Edwin R. Bautista became the president and CEO of UnionBank in 2018, he saw the future of the bank. It had to go digital. UB must not only grow. It must grow big. It must not only be big, it must be better. It must be the first and the best in things digital – for the benefit of the consumer and the people.

Edwin began with UB in 1997, starting as a senior vice president (1997 to 2001), rising to EVP (2001 to 2011), then president and COO from January 2016 to 2017 and, since 2018, UB’s CEO.

Edwin has uncorked the most aggressive and innovative technological expansion ever undertaken by any local bank. UB formed UnionDigital Bank middle of last year to promote financial inclusion.

Financial inclusion, says the World Bank, “means individuals and businesses have access to useful and affordable financial products and services that meet their needs – transactions, payments, savings, credit and insurance – delivered in a responsible and sustainable way.”

Financial inclusion means you must have a bank savings or checking account, a credit card, an insurance policy or a loan accommodation – even if you have little or no money. Needless to say, you must have a cellular phone, an email address and WiFi.

With a transaction account, explains the World Bank, the unbanked “can access financial services like credit and insurance, start and expand businesses, invest in education or health, manage risk and weather financial shocks.”

In 2019, the Bangko Sentral ng Pilipinas (BSP) had a disturbing finding: Seven of every ten adult Filipinos had no bank account. There are 80 million adult Filipinos. More than 56 million of them had no bank account. Either they are afraid or are intimidated to go to a bank or banks simply don’t want to do business with them or allow them to open an account. That was how arrogant or indifferent our banks could be.

Of 1,633 towns and cities in the Philippines, 15 percent or 249 towns and cities do not have a single bank branch. Per BSP, 37 percent of adults have savings; of those with savings, 52 percent keep the money at home.

Fed up with the setup, BSP wants that by end this year, 70 percent of Filipino adults must have a bank account. That is what you call a reversal of fortune, from 70 percent without an account in 2019, to 70 percent with an account by end-2023. Congrats, BSP.

The have-nots market is big. In cases of emergency (like money for medical, tuition or monthly bills), the last person Filipinos approach is a banker. They seek first family or friends (41 percent), or work mates (21 percent), or tap their savings (19 percent). Only 9 percent get a loan from a bank or a private lender.

In a BSP 2021 survey, only 4 percent of Filipino adults correctly answered questions on inflation and interest rate. Filipinos must be educated about money and the banks are failing in that mission.

Amid the dreary financial illiterary landscape comes UnionBank.

UB’s digital subsidiary, UnionDigital Bank, is leveraging the strengths and network of the 15 companies under the Aboitiz Group, a conglomerate founded by a family who arrived in the Philippines in the late 1800s. Aboitiz wants to be the country’s first tech-conglomerate. With presidential adviser Sabin Aboitiz as CEO, Aboitiz businesses include power generation and distribution, financial services, real estate, food manufacturing and industrial production.

Under CEO Bautista, UB is among the top banks in terms of innovation, shareholder value. It is among the industry’s lowest cost producers and one of the most profitable in terms of return on equity, return on assets and absolute income.

UB leverages on technology and its agile culture to meet the customers’ changing and diverse needs and continuously enhance customer experience.

For UB’s digital strategy, in 2018, Edwin tapped Henry Rhoel R. Aguda, from Globe Telecom. UBP’s chief technology officer and chief transformation officer, Henry is now the president-CEO of UnionDigital Bank. Henry made UBX Southeast Asia’s fastest-growing fintech company.

Henry studied mathematics and law at UP. He is chairman of City Savings Bank, the UBP subsidiary focused on underserved markets.

Non-banks are increasingly eating into the banking business. Since last year, Globe’s mobile e-wallet, GCash, has been doing P3 trillion worth of transactions servicing payments for services, goods and remittances.

As early as 2016, UnionBank CEO Edwin saw disruption in banking due to digital advances. “We anticipated that customer behavior and needs would drastically change due to the rapid acceptance of mobile digital technology such as smartphones, smartpads, the use of apps and so on,” he says.

His digital strategy envisions a “a new tech-enabled and agile UnionBank organization aside from building a best-in-class IT infrastructure to support and sustain operations.”

UnionDigital Bank, or Ubeh, aims to provide low-cost digital banking services and make banking accessible to unbanked and underserved Filipinos. Its mobile app serves as a one-stop fully fledged platform offering community-based financial services. Ubeh utilizes data analytics and machine learning to enhance cybersecurity and risk management.

Edwin also plans to grow SMEs, “the lifeblood of the countryside,” he points out. “They grow our crops, they catch our fish and they are the subcontractors for our big manufacturers.”

UnionBank’s clientele includes retail, middle-market and corporate customers, as well as major government institutions.

UnionBank says its digital rollout has enabled it to capture and secure a loyal customer base and achieve high levels of efficiency and productivity.

In December 2021, UnionBank bought Citi Philippines’ credit card, personal loans, wealth management and retail deposit businesses.

The Citi deal brought in one million new customers and P99.4 billion in total assets, P69.4 billion in gross loans and P65.3 billion in deposits. The acquisition will make UB the largest and most profitable retail bank.

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