Let’s get digital
Union Bank of the Philippines decided to go digital way before the COVID-19 pandemic made digital transformation an imperative. Here, UnionBank president and CEO Edwin Bautista talks about the thinking behind the strategy.
Q How was the direction of digital transformation of UnionBank decided?
A: UnionBank has long had a goal to be a “Top 5 Bank.” When I was appointed president (almost five years ago now), I felt that this goal was achievable, but that just “doing more of the same” was not going to be enough.
Thus, during our strategic planning session that year, we made sure to have several well- known “futurists” and a world-class business consultancy group help us understand the game-changing challenges that banks and financial institutions were facing or about to face.
That’s when one of them “hit us front and center” when they concluded that we needed to “digitize or perish.” This came with the insight that our future-competition was not just limited to peer-banks but also to fintechs and techfins such as Facebook, Google etc., who already had a digital relationship with consumers that they wanted to leverage against.
Furthermore, the emergence and rapid adoption of new technologies such as artificial intelligence (AI), blockchain or distributed ledger technology (DLT) and cloud computing would drastically change industry paradigms; as well as accelerate the “convergence-disruption” of various industries.
Thus, off we went on our digital transformation journey.
Q: A major transformation requires a structure. What was the transformation team composed of? How were decisions made?
A: Immediately after we decided on our digital transformation, we realized that the bank [then] had no “digital masters/experts” in its ranks. So, one of the first things we did was to look far and wide for the “best-in-class digital masters,” regardless of industry and preferably “outside of banking and financial services.” With this new core leadership onboard, we tasked them to design from scratch the “optimum digital architecture;” again benchmarking against all industries (beyond banking).
Transformation is best achieved with the blending of banking experts collaborating with experts from other industries. Because we believe in the power of diversity of talent, experience and perspectives that—when driven by a common vision—is capable of producing truly endless innovations.
Once we secured board approval to this architecture and road map, we concentrated on getting the buy-in of both senior executives and middle management. The former because they had the influence over their business units and the latter because we believed they would be the “primary beneficiaries” of our successful digital transformation.
Aside from more frequent “town halls,” many smaller group meetings soon evolved which we liked because it showed that many in the organization were very passionate about this journey. These smaller meetings focused on delivering a seamless, end-to-end “U/X” (user-experience) and eventually evolved into cross-functional “squads” and “teams,” which further broke-down the “traditional functional silos” in regular banking and finance organizations.
The “teams” and “squads” quickly took ownership of creating possible solutions and recommendations that would then be elevated to senior management and the board for final approval. This was very encouraging as it showed that: 1) there was broad engagement, participation and ownership of the transformation journey; and 2) there were many more ways to “skin-the-cat” as it were given the explosion of ideas and suggestions from the rank and file (not just “management”).
Up to this today, this “from the ground up” and “collaborative, consultative” planning and decision-making is what we are practicing in UnionBank. I attribute this as one of the “secrets” to our “quick successes” as well as our “fast pivots” when we needed to adjust our initial plans.
Q: How were the risks versus rewards of major investment sold to the board? How long did it take to get their approval?
A: Going back to our major epiphany about five years ago—“digitize or perish!”—I would say that the strategic risks were already well understood by our board. Perhaps the main risks were “operational or executional risks” as our total transformation could have gone overtime and overbudget. This is why we made sure that we were aligned with the board on year-by-year goals in our (multiyear) digital transformation journey.
What’s more is that, aside from funds to be invested and timelines, we crafted measurable KPIs (key performance indicators), which included end-user and/or C/X (customer experience) feedback whenever possible. At this stage, we had gone beyond “cost savings” as the core reason for our transformation but rather “best in class C/X” and “customer centricity” as the primary KRAs (key result area) of our efforts. By being clear and consistent in what to expect and how to measure progress, the board has rewarded us with constant support and counsel; and, lately, has even encouraged us to invest more and transform faster.
Q: What were the initial critical issues you had to pay attention to ensure successful execution of the digital-first vision?
A: There certainly were many critical issues that I was very aware of as we executed our digital transformation; but there was always one common core challenge. And this was to ensure that no one would be left behind in our transformation. Not our customers, our colleagues and partners etc.
Importantly, this core challenge also became one of our key enablers for change. Because of the promise, everyone joined in over time, which allowed us to transform at-scale. Our employees and partners also came together to move forward; and our customers rewarded our efforts by changing their banking habits and processes, in step with our transformation.
Constantly repeating that customer centricity was our main KRA helped galvanized our actions, beyond improved efficiencies and reduced costs. Simply put, if our new “process” or “digital touchpoint” did not make our customers “happier,” “safer,” “[do things] faster and simpler,” then it would tell us to continue to iterate and upgrade, update etc.
As for our fellow UnionBankers, we saw how “middle-aged” colleagues embraced and embarked on new “digitally enabled” careers such as coding, digital operations, data analytics and AI, etc.
Using them as role models, they helped prove that a successful digital transformation would also transform their roles from backroom and backup to customer-facing.
What’s more, the experience of these veterans greatly added the proper human relationship context in our new digital touchpoints to ensure that “UnionBank digital banking” is “more human” and more responsive (and where we leverage “AI” as “augmented intelligence) to fulfill our customers’ needs than ever-before. The ability of our fellow UnionBankers to quickly skill-up on digital capabilities is a testament to the resiliency of our bank culture … able to unlearn, learn and relearn.
Q: The pandemic accelerated the digital transformation of various major banks. Where do you plan to see UnionBank in the digital landscape among banks?
A: That is certainly very true. And the digital normal is here to stay … for good.
We credit the BSP (Bangko Sentral ng Pilipinas), under Governor (Benjamin) Diokno’s watch, of being a major catalyst in this rapid digital transformation of banks and financial institutions.
I believe the future looks bright for UnionBank and its subsidiaries in this environment.
(Union Bank of the Philippines is one of the 10 winners of the 1st Mansmith Innovation Awards. Bautista will speak at the 1st Mansmith Innovation Summit and Awards on March 3 and 4. ) —CONTRIBUTED
Subscribe to INQUIRER PLUS to get access to The Philippine Daily Inquirer & other 70+ titles, share up to 5 gadgets, listen to the news, download as early as 4am & share articles on social media. Call 896 6000.