SCREENGRAB from www.securitybank.com
Security Bank Corp. is set to enter the bancassurance business in partnership with a multinational insurance firm as part of its strategy to build up its retail banking presence.
“We will probably have an announcement in a week or so. We are finalizing a bancassurance agreement with a multinational insurance firm,” Security Bank executive vice president Rafael S. Algarra Jr. said in an interview with the Inquirer Thursday night.
Bancassurance refers to the cross-selling of insurance products in bank branches, a new area of growth for banks’ fee-based earnings. In the Philippines, a bank will have to own at least 5 percent of a company whose insurance products it will sell.
“It will be an exclusive deal,” Algarra said. “We will know in the next week or so.”
Any deal will still have to be cleared by financial regulators Bangko Sentral ng Pilipinas and the Insurance Commission but the bank is seen close to firming up an agreement in principle.
Asked why the bank was going into this new business only now, Algarra said: “This bancassurance is a consequence of us moving into the retail banking segment. This is hand in hand. It’s more of the perspective that we don’t look at bancassurance as a specific product but as part of the value proposition to our clientele.”
He said Security Bank was expecting to grow its retail business “by several folds in the next few years” and its forthcoming partner in bancassurance was likewise excited by the prospects of insurance products being sold in the bank’s branch network of at least 250 branches all over the country.
The bank sees good prospects in life insurance given the low penetration of this industry at present. “Insurance penetration in the Philippines is only one third of Malaysia so the prospects are quite good,” he said.
Earlier this year, Security Bank unveiled an aggressive plan to build up its retail banking operations to become a formidable new leg, accounting for about a third of total business in five year’s time. By grooming retail banking business to be another major growth engine in the future, the bank seeks to diversify its income stream and unlock higher margins.
Bank officials said this was a culmination of a 10-year roadmap that has allowed the bank to establish a strong presence in wholesale and middle-market banking as well as treasury businesses. The expansion into the retail business targets the “emerging mass affluent” segment, or consumers with household income of about P50,000 a month or P600,000 a year. This segment accounts for about 10 percent of the total population.
In the next few years, Security Bank also expects to reach a 300-branch network.
“But we’re more concentrated in trying to make sure branches are efficient. Efficiency is more important than the number of branches,” Algarra said.
Early this year, Security Bank also embarked on a rebranding program and enlisted beauty queen Megan Young as its new brand ambassador.