The country’s largest lender, BDO Unibank, is building up its digital capability to hasten innovation and better compete with nimble financial technology (fintech) companies which, across the globe, have been gnawing on banks’ core businesses such as payments and lending.
“We are cognizant of the threat from digital wallets and payment companies as well as fintechs,” BDO president Nestor Tan said during the bank’s stockholders meeting on Tuesday.
Two years ago, Tan said the bank had initiated a series of information technology (IT) projects to bring BDO up to speed with fintech firms. Many of these initiatives were supposed to be rolled out this year but were delayed by the lockdown measures imposed when the coronavirus pandemic started spreading locally, he said.
“You will see some of them coming toward the latter part of this year—just to mention a few: QR (quick response) capability similar to Alipay, an upgrade of our digital banking to reflect a more modern architecture, upgrading of our IT platform so that it will be more modern and will be able to integrate with outside applications,” Tan said.
BDO has likewise upgraded its cybersecurity settings by tapping global experts, Tan added.
“It’s not only the platform that we are implementing shortly, but it’s also the upgrade of processes and procedures in the bank,” he said.
“It’s an overall package that we’ve been working on in the last 24 months, and we will see through the implementation in the next few months,” he added.
Tan said the bank would continue to work on initiatives toward financial inclusion, keeping in mind that 70 percent of the local population were still outside the banking sphere. He said BDO would tap digital channels to reach out to a larger market.
Asked during the stockholders meeting whether branch expansion would still be relevant in the future, Tan said as digital transactions pick up, there could be a slowdown in new branch rollout.
“But at the moment, as we move into the countryside, it’s probably premature to say that branches will cease to exist,” he said. “Online transactions have surged during the [enhanced community quarantine]. However, we can’t yet do away with physical banking completely.”
To brace for this challenging year, BDO is setting aside P22.3 billion in provisions for probable loan losses for the full year. It expects loan growth to soften this year amid the difficult operating environment alongside a potential increase in credit losses as the country heads into an economic recession and as consumers face job cuts and slower remittances alongside risks of a second wave of coronavirus infections.