UnionBank, UnionDigital join Seamless Philippines 2021 to talk digital-native banks, role of regulation in promoting industry innovation

Union Bank of the Philippines (UnionBank) and its digital-native neo-banking arm UnionDigital joined as participants at the recently concluded Seamless Philippines 2021. Ably represented by UnionBank Chief Technology & Operations Officer and Chief Transformation Officer Henry Aguda and UnionDigital Chief Executive Officer and Co-founder Arvie De Vera as speakers, both shared insights on a number of topics related to banking, payments, and e-commerce, during the three-day event that took place last October 12 to 13.

Sharing insights, CTOO and CTO Aguda touched upon the advantages of having a digital-native neo-bank in addition to a traditional banking entity, citing UnionBank and its neo-banking arm UnionDigital as examples. Having a digital-native banking entity gives UnionBank new opportunities to recreate its banking services and enable new experiences for customers.

“It opens up a lot of opportunities in terms of your infrastructure, your green field. You’re already cloud native so to speak, and with that, you’re opening yourselves to better and faster product development. And with faster and better product development, hopefully you’ll be able to lock in communities with specific needs,” Aguda said.

“That’s the thinking behind having both UnionBank as a more mature digital bank, and a neo-bank like UnionDigital having its own digital license,” Aguda added.

The acquisition of the license is an important step as it gives the banking group more room for innovation, as is the case with UnionDigital.

“As much as we want to draw upon the synergies in the group, we also encourage the new unit to innovate and think outside of the box. We’re trying to free them from whatever traditional constructs there are and try to make them as innovative as possible,” Aguda said

Meanwhile, De Vera talked about the role of regulation in encouraging innovation and competition in the financial sector, contributing to the goal of the Bangko Sentral ng Pilipinas (BSP) to have a steady increase in the volume of digital transactions in the country.

“If you look at the digital transformation roadmap of the BSP, the goal is really to move digital transactions from what it was—about 1 to 2 percent five years ago, because the pandemic has accelerated adoption, it’s now at about 25 percent. But that’s still far from the entire goal,” De Vera said.

The UnionDigital CEO pointed out how the BSP has always been open to innovation, creating a financial landscape that is abundant in initiators and groundbreakers, particularly fintechs, resulting in higher usage of digital services, among other benefits.

“We’re under-penetrated, underserved, so if you look at the history of fintech adoption in the Philippines over the past ten years, it’s been fantastic. And that’s primarily because of regulation. Obviously there’s a gap, but the Filipino customer wins and the adoption is varied.”

“If you zoom out and not just focus on the digital bank regulation alone, but really look at the Bangko Sentral’s digital transformation roadmap as the plan, then it puts everything in perspective, and we digital banks have a piece to play in that plan. We’re a big piece, but we’re not the only piece,” De Vera concluded.

UnionBank SME Segment Head Jaypee Soliman also joined the conference as a moderator for a separate panel that focused on “preparing for the business and the customer of the future”.