In this Q&A interview with Edwin R. Bautista, President & CEO of UnionBank of the Philippines, he reflects on his pre-banking background in consumer goods and his mechanical engineering degree. This has been useful in dealing with the Internet revolution and the next stage of his bank’s development – its on-going digital transformation.
Question: Q1. Please describe your background and career?
A1. I’ve not always been a banker. I used to work in the fast moving consumer goods (FMCG) industry as a brand manager at Procter & Gamble. I was part of the team that made Safeguard soap’s market share soar from 10% to a dominant 50% by challenging conventional thinking. I like to do this. Perhaps it is a consequence of my time in academia where I previously worked as part of the faculty at De La Salle University’s (DLSU) College of Engineering and as director of their placement office finding real-world applications for the skills of students.
I am an alumnus of DLSU in the Philippines, receiving my mechanical engineering degree from there, while garnering the institution’s Brother Gabriel Connon Award as its most outstanding graduate and a gold medal for the best thesis. I subsequently studied at the Harvard Business School.
I pursued a degree in Engineering because my father, uncle and grandfather advised me that it’d help to succeed in the corporate world, thinking about its central role on the Industrial Revolution. I did not expect the Internet Revolution, but actually it’s proved to be a very useful foundation for that too as it taught the skills to think about how to design things, understand how things work and to practically solve problems. Engineering helped me prepare for today’s world. It’s now helping me advance UnionBank of the Philippines’ on-going digital transformation. [more on that later -Ed.]
Q2. When did you enter banking & why?
A2. I started out in a senior role in the sector as head of Citibank’s Global Transaction Services unit in the Philippines.
I joined UnionBank in 1997 as a senior vice president, and have had various leadership roles in the areas of transaction banking, credit cards, retail banking, auto & mortgage loans, corporate and digital. In 2006, I served as president of the International Exchange Bank (iBank), which was acquired by UnionBank, until its successful merger with the wider organisation.
I rose to the position of President in 2016 and soon after UnionBank launched its ‘digital transformation’ project, which prompted the unveiling of several pioneering products, services and platforms, on top of other initiatives like partnerships with fintechs and advocating the use of blockchain technology. Our commitment is to complete the digital journey, away from branches and paper-based procedures, with the promise that “no one gets left behind”.
Q3. Tell us about your digital transformation project?
A3. We started the journey four years ago by commissioning a world-class management consultant group to help us define the future of banking amid the tremendous economic, technological, and demographic changes around us. Their conclusion and recommendation was to digitise or perish. What we’d expected to be a strategic plan overhaul became an existential threat that we’re now responding to.
Digital Transformation Strategy – The A, B, C plan
The Bank is accelerating the Digital Transformation Strategy established in 2016 to prepare for the fully digital future of banking, as the younger generation joins and new tech emerges (this is Plan B), while simultaneously we’re strengthening today’s business (Plan A) by minimising paper and branches that need lots of staff. This initial A plan involves delivering basic digital hygiene comprising of:
- 24x7 ‘always-on’ availability
- paperless straight through processing (STP)
- secured transactions
- 6sigma reliability
- & superior customer experiences (CX) through enhanced digital touchpoints.
The above has largely been achieved, winning UnionBank the Best Retail Bank: Philippines accolade at the virtual Retail Banker International (RBI): Asia Trailblazer Awards 2020, alongside the Best Social Media Campaign.
We’re also using technology to improve operational efficiencies via artificial intelligence (AI) powered robotic process automation (RPA). As we master agile ways of working with fintechs, we’re now progressing into DevOps as part of the second stage moving into Plan B, where the intention is to speed up product releases, future-proof ourselves and upskill our people in data and data science capabilities.
Further wins in the Remittance and ATM categories of this year’s RBI: Asia Trailblazer Awards point to this future-proofing element of the bank’s strategy, as both utilised nascent blockchain technology to respectively prove a pilot sending migrant money home from Singapore to the Philippines, and release a virtual cryptocurrency (Bitcoin).
Banking may become totally embedded in people’s daily activities or totally decentralized. We want to be ready for any eventuality with our B plan.
UBX, the Bank’s technology and innovation company, helps us in this regard as it makes investments in start-ups exploring the future of banking, engages with fintechs, runs pilots, experiments and so on. The aim is to immerse itself in emerging technologies and trends, such as the blockchain or tokenized economy, and to ensure the bank can use technology to advance and embed financial services (FS), while simultaneously protecting its position, ensuring low running costs, and so on.
There is also an addendum Plan C to better capture and serve the unbanked/underbanked segments in the country as well via effective technology usage. This is in-line with the bank’s goal of achieving inclusive prosperity and growth at low cost.
Q4. Has this investment in technology helped you & your customers to weather the Covid-19 coronavirus crisis more easily than otherwise would’ve been the case?
A4. Internally as a bank, yes tech has helped us and, externally, it has helped our customers. We had a smooth transition during Covid-19 due to our digital strategy and capabilities. For instance:
- Internally: Banking operations continued business-as-usual (BAU) despite the majority of people working-from-home (WFH). All major bank operations, continued to run smoothly and even at the beginning 90% of UnionBankers could work from home across our ops team, marketing, and customer services team. This was possible because most of the bank’s systems and applications are available in the cloud or can be managed offsite.
- Connectivity and meeting tools were also readily available to employees allowing them to work remotely and ensure their productivity. Employees had mobility and digital collaboration kits.
- For customers: a full range of branch services were kept, and service hours remained the same. Branch operations and transactions were monitored remotely in the Operations Center.
- ATM availability and cash levels were constantly monitored via remote dashboards to ensure that they are up and running and to ensure customers had access to ample cash all the time.
- Digital banking services allowed customers to ‘bank from home’. UnionBank’s Online app for retail or its portal for businesses allow for digital account opening, mobile cheque deposits, bill payments, remittance and so on. A ‘Bank on Wheels’ services was launched to augment banking services in areas with heavy cash needs.
- Cybersecurity measures were also well in place and beefed up especially during the enhanced community quarantine (ECQ) lockdown when digital transactions were most active.
Covid-19 has accelerated customers’ transition to digital. Indeed, we’ve seen a dramatic increase in digital account openings and a further widening in the preference for digital over branch transactions. This has meant we’ve ramped up our digital customer acquisition activities for individuals and corporates, who are also going more digital. Additionally, we’ve further beefed up our internal IT infrastructure, skills lessons and organisational capabilities to cope with larger scale demand, sooner than expected.
What we are most proud of is being the only Philippine bank recognized in the Top 10 ‘Most Helpful Banks in Asia-Pacific During Covid-19’, according to the Bank Quality Consumer Survey on Retail Banks by BankQuality.com. Their online survey carried out during April 2020 had 11,000 respondents between the ages of 18-65, from China, Hong Kong, India, Indonesia, Malaysia, Philippines, Singapore, South Korea, Taiwan, Thailand and Vietnam.
We were the only Philippine bank in the top 20 list from among a total of 80 banks surveyed; and were second only to KakaoBank, South Korea’s largest ‘digital-only’ bank. This makes us proud and justifies our investment in a digital strategy.
Supporting local business & the recovery
Post-pandemic I believe we need concrete plans to grow SMEs in the Philippines – and not just established corporates – because they are the lifeblood of the countryside. They grow our crops, catch our fish, and are the sub-contractors for big manufacturers and retailers. With the help of our regulator, I hope that there will be more incentives and new ways to lower our lending costs so that all banks can redeploy more of their loans portfolio to this sector. It would also be beneficial to encourage more local manufacturing, especially the raw materials are available, as it’d solidify vulnerable long supply chains.
In summary, I believe, the coronavirus crisis emphasizes that all of us have a higher purpose. For us at UnionBank, it is to further extend digital banking to the mass market and the unbanked, while supporting businesses on their own digital journeys so they’re better able to withstand disruptions in the future.