Adapt or be left behind

July 28, 2019

IN the fast evolving digital landscape,  “where new technologies are changing the way we live, the way we communicate and the way we work”,  Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno, said companies across various sectors must  either  adapt or be left behind.

Speaking recently before the Bankers Institute of the Philippines (BAIPHIL),  Diokno,  zeroed in on  banks and other financial institutions which  must  “ride the wave of digital transformation. Otherwise, we will become irrelevant and obsolete.”

Blesilda P.  Andres, newly-inducted president of the Bankers Institute of the Philippines (BAIPHIL) agrees 100 percent.

“Indeed, banks have been assaulted by  waves of disruptive developments impacting bank products, processes and operations,” Andres said.

“One such wave is driven by non-banks called FinTech companies which can offer— either as technology service providers or even as direct competitors of banks—an array of technologically-advanced financial services, from payments and settlements to lending and personal financial management, often at much less cost and more efficiency, its reach riding on the ubiquity of mobile devices.”

Another problem faced by banks is the onslaught of  cyber threats  launched by well-organized, well-funded groups.

For sure,  the banking “big boys” are already in various stages of  riding the digital wave.

Bank of the Philippine Islands (BPI), for one, is intensifying its digitalization efforts to support rapid growth, enable more convenient and efficient banking for clients, and increase financial inclusion.  

BPI President and CEO Cezar P. Consing said “the ultimate objective is to elevate  BPI’s digital infrastructure, to bring innovative services to existing and future clients, as well as to support the Bangko Sentral ng Pilipinas’ (BSP’s) initiative to develop a National Retail Payment System (NRPS), which involves policies and standards for a “cash-lite” economy.”

“This long-term digitalization journey will enhance our extensive network of ATMs, CAMs (Cash Acceptance Machines), online facility, and mobile app, to enable us to offer convenient, self-service banking,” Consing added.

BPI Enterprise Services Head Ramon Jocson said “the process of digitalization, despite inevitable hiccups along the journey, will eventually lead to exceptional customer experience as more and more people gain more confidence in doing online and mobile transactions”.

For those  institutions which  will be able to adapt, the  rewards - potential for growth, profitability and even financial inclusion - are great.

But harnessing the power of these technologies also requires a new, more forward looking approach.

It entails a   review of the legal framework, as well as outstanding traditional regulations on which governance responsibilities are anchored.

Diokno assured that even the Bangko Sentral has  been increasingly digitizing in order to improve its service to the public.

This is  in line with the E-Government Master Plan which is envisioned to provide, among others, “responsive, online and citizen-centered services for Filipinos.”

To keep pace with the  digital  transformation, Diokno said the BSP set up in 2018 a dedicated Technology Sub-Sector to insure an operational and cyber-resilient financial system.

Diokno said the BSP has embarked on a  Strategy for Technology Adoption in Regulatory Supervision or STARS.

Under STARS, Diokno said the BSP is “now employing regulatory technology  (‘regtech’)  and supervisory technology (‘suptech’) solutions.

Regtech and Suptech provide BSP with “real-time market surveillance, supervision and examination, digitalization, data analytics, data collection and distribution”.

“They also enhance the timeliness and quality of our risk-based decision-making,” Diokno stressed.

(Disclosure: The writer is an Independent Director of the Ayala-led Bank of the Philippine Islands.)

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