The banking industry needs to go digital for survival and may seek the specialty offered by financial technology (fintech) firms for more efficient service delivery, according to bank and fintech executives on Thursday.

During The Asian Banker’s Finance Philippines 2019 conference at Taguig City on Thursday, UnionBank of the Philippines, Inc. President and CEO Edwin R. Bautista said banks have an excess of data accumulated over decades of operations, as well as a strong customer base, but remain “stuck” in the traditional way of operating.

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“Banks also have the customer base that you can start to milk. The only problem is they may want to partner with you but if they realize that you cant run as fast as them, they’re going to lose interest in you and that’s the biggest challenge,” Mr. Bautista said during a panel discussion.

Monetary Authority of Singapore’s special advisor on artificial intelligence David R. Hardoon was of the same sentiment, saying traditional banks have accumulated immense data through years of collection but are not as efficient in utilizing them as fintech firms.

Mr. Bautista said financial institutions’ “willingness” to change will play a crucial role in “retooling” their infrastructure and business models.

“We have to retool our basic infrastructure, we have to start thinking almost like them so we can run and work with them. Otherwise, they will go elsewhere,” he said.

Also read: UnionBank great (digital) leap forward.

For Cezar P. Consing, president of Bankers Association of the Philippines and also the president and CEO of Bank of the Philippine Islands, going digital will also help in banks’ survival and in keeping up with fintech players, adding that this could also bring business costs down.

“We need to transform ourselves into this agile, different type of organization that seemingly harvests technology culturally and differently… If you think that the world is gonna be the same forever, then there’s no business proposition in digital transformation,” Mr. Consing said.

Likewise, Jackal Ma, co-founder of China’s Tongdun Technology, said technology will ultimately help boost customer experience for financial institutions, including the use of the artificial intelligence (AI) which “improves the balance between user experience and risk control.”

Mr. Ma said some of the services that AI can help in are detecting fraud discussions, particularly in social networks, and identifying patterns of suspicious behavior.

Going digital will also allow lenders to reach the huge unbanked sector in the Philippines, said Vijay Manoharan, CEO of CIMB Philippines.

Also read: More than semantics: Digitization, Digitalization, Digital Transformation

Mr. Manoharan said digitalization will simplify account and credit applications as well as reduce the complexity of the traditional banking experience, which will ultimately attract clients to transact with banks.

According to the Bangko Sentral ng Pilipinas’ Financial Inclusion Survey, 22.6% or around 15.8 million of Filipino adults as of 2017 have bank accounts, leaving 52.8 million adults or over 70% unbanked or without accounts with any financial institution. — B.M. Laforga

Article source: Business World