BDO Unibank: Proving that Digitalisation Is the Best Path to Inclusive Banking (2024)

By Samantha Barnes, International Banker

In a country that’s replete with banking stalwarts, BDO Unibank continues to stand tallest, leading the Philippines from the front into a new age of not only digital banking but, perhaps more importantly, inclusive banking.

The largest bank in the country across a range of metrics including total assets, BDO has been long considered the Philippine full-service financial institution of choice, offering a comprehensive suite of financial products and services to a diverse client base—and doing so through a wide and growing array of channels.

Corporate and institutional banking, retail banking, rural banking, private banking, investment banking and transaction banking are just some of the businesses in which BDO is widely regarded as the undisputed industry leader within the Philippines. And with 17 international offices including remittance offices in Europe and North America, a representative office in the Middle East and 11 offices in Asia in addition to the roughly 1,450 offices within the Southeast Asian archipelago nation, BDO has established itself as a renowned name on the international stage of global banking.

As far as raw numbers are concerned, the bank has continued to deliver a stellar performance even into 2020, posting 7-percent growth in pre-provision operating profit during the year’s first quarter, compared to a year earlier. But more than its financial performance, it is the nature through which it has approached two key goals—boosting financial inclusion and banking digitisation—that has earned the bank many plaudits and helped to considerably enrich the banking experience of the average BDO customer.

Indeed, “Commitment to Customers” represents the first of the bank’s four core values: “We are committed to delivering products and services that surpass customer expectations in value and every aspect of customer service while remaining prudent and trustworthy stewards of their wealth.” And its overall service philosophy tagline “We Find Ways” underlines just how committed the bank is to find the right solution for each customer.

The bank uses the acronym CORE to demonstrate the values instilled across its branches and personnel with respect to customer service:

• C for “Customer focus”: Everything we do must have the customer’s objective in mind;
• O for “Out-of-the-box” thinking: We are not constrained by traditional ways of doing things;
• R for “Right attitude”: We go the extra mile knowing that our job is not done until the client is satisfied;
• E for “Excellent execution”: From beginning to end, the whole servicing process must work without a problem.

But rather than simply having such high ideals in theory as a way to merely appear impressive, BDO makes sure that it lives its principles every day. The bank is constantly aware that, ultimately, everything it does is done to achieve a customer need and provide each and every customer with the highest possible standards of service—whether that is for a single transaction, single product or service, or, indeed, single client.

This mindset is best exemplified by the dedication and team spirit that has been amply on display amid the COVID-19 pandemic and the Enhanced Community Quarantine (ECQ) that came into effect throughout the Philippines in March. Despite government directives mandating a scaling down of bank-branch operations throughout both the metropolitan area of the capital city, Manila, and the Philippine island of Luzon (in which Manila is located), BDO’s branch personnel have continued to perform their roles impeccably, remaining on hand to ably support and service clients’ banking requirements. Skeletal crews, meanwhile, have manned head-office units to support branches, as well as cash, loan, payment activities and many other banking services, thus highlighting the sheer commitment and resourcefulness of BDO staff, who have continued to work despite the often severe transportation and mobility restrictions that have resulted during the lockdown.

Part of the bank’s stellar response to COVID-19 can also be attributed to its culture of innovation, which has helped it to adapt more easily to the restrictive conditions that continue to prevail. For instance, it has greatly simplified its branch forms and streamlined its branch processes during the last year or so, with the aim of making it easier and quicker to onboard new customers. It has also continued investing heavily in information technology (IT) and digital banking as a way to boost service delivery and improve accessibility for its customers. This investment is now proving to be hugely fruitful during the ECQ, a period in which the availability of digital, online and mobile banking channels has been critical for some customers to continue to receive uninterrupted service despite mobility and transportation restrictions.

As part of its digital-banking development, the bank has also focused on improving remote-access facilities to both bolster accessibility for customers and reduce the need for in-person interaction. Again, the ECQ has made this a vital enhancement, with remote access being ideal for both customers and staff; indeed, the bank has implemented key workplace changes with the pandemic in mind to ensure the safety and wellbeing of employees and customers.

Elsewhere, BDO has embarked on additional digitisation projects. For instance, a new project is about to get underway that seeks to re-engineer its customer journey into a fully digitised process. This will help to automate and streamline operations across the bank, which in turn should improve efficiency, enrich the customer experience and reduce costs over the long term. The pilot will commence before the bank initiates the project’s rollout. And another notable next-generation IT project involves the deployment of modern architecture platforms, with the aim to significantly boost turnaround times, improving accessibility across all banking channels and beefing up security to ensure peace of mind for the customer. Indeed, the bank has almost finalised its comprehensive cybersecurity program for this purpose.

The lack of financial inclusion in the Philippines remains a persistent problem, however, and one that BDO seeks to address actively. Banking penetration in the country currently stands at a lowly 35 percent, while around 30 percent of the country’s cities and municipalities still remain unbanked. And perhaps most concerning of all from a forward-looking perspective is that just 14 percent of Filipino customers access their banks digitally, compared with a 50-to-60-percent average for the ASEAN (Association of Southeast Asian Nations) region. Clearly, improvements need to be implemented to push those numbers higher, and, thankfully, BDO is now on the front lines of confronting this particular challenge, reaching out to the financially underserved and unbanked populations and actively bringing more people into the banking system.

It can already boast of having the country’s largest distribution network, with more than 1,400 branches and more than 4,400 automated teller machines (ATMs) nationwide. Furthermore, its extended hours and weekend banking availability ensure it remains as accessible as possible to both existing and potential customers. And for micro, small or medium enterprise (MSME) customers, BDO has established a lending program through its rural banking arm, BDO Network Bank, which also provides salary loans to teachers and government employees. As BDO President and CEO Nestor Tan acknowledged in the 2019 Annual Report, last year saw the bank double its MSME coverage areas and increase its coverage of new markets “with the deployment of 127 branches and offices nationwide”.

The bank’s digital-banking ecosystem also plays a crucial role in this regard. A multi-channel set-up seamlessly integrates the bank’s extensive branch network with its digital, online and mobile banking platforms. The set-up is facilitating significant growth in transaction volume as a result, with 63 million digital transactions processed last year—a whopping 39 percent more than 2018’s numbers. Within the ecosystem, it’s arguably BDO’s mobile-banking solution Cash Agad that has emerged as the single most important digital offering. Cash Agad allows debit and prepaid cardholders to perform banking transactions through the use of point-of-sale terminals deployed to more than 8,000 BDO partner agents nationwide and thus greatly expands the number of venues at which customers can conduct banking transactions and cash fulfilment.

Boosting financial inclusion represents one of BDO’s principal objectives over the medium term, as the bank aims to continue enhancing its presence in unbanked and underserved markets. Other targets include consistently upgrading its digital infrastructure to ensure it can offer the most agile, nimble and secure digital platform to its customers—as well as focusing on its wealth- and investment-management businesses and, in particular, making sure they are more accessible to local high-net-worth individuals and the emerging affluent crowds, both of which have grown considerably in the country in recent years.

Indeed, wealth management is a business area that has received much attention over the last year or so. According to Mr. Tan, the bank has expanded its foreign-currency investment options and increased the number of licensed investment practitioners. “We segmented our servicing effort to cater to the high net worth (HNW), the mass affluent, and the digitally-savvy emerging affluent in different ways with different value propositions. Further, we reorganized BDO Securities into a full-service brokerage firm to provide clients with an expanded product suite to include nonequity securities.”

But, of course, with the coronavirus crisis far from over, the bank’s immediate target over the next year is to ensure that its balance sheet remains as insulated as possible from the continued fallout. It intends to do this primarily by apportioning PHP20 billion in upfront provisions to cover for potential delinquencies that have arisen due to the pandemic and ECQ as well as reviewing credit-underwriting standards and conducting periodic loan-portfolio reviews. The bank is also working with its borrower clientele and extending them support through loan payment extensions and/or rescheduling facilities.

Nevertheless, the end goal will be to restore operations to full throttle as quickly as possible. Branch operations have already been fully restored, having been at around 45 to 50 percent of full capacity at the start of the ECQ back in March. The bank must also ensure that it is completely adaptable to the “new normal”, a concept that may be fully defined only once the pandemic is consigned to the past. That said, changes have already been implemented with a new normal in mind, particularly with regards to working conditions with enhanced health, safety and security measures now in place to ensure the wellbeing of BDO employees and clients.

Thankfully for the bank, it has abundantly demonstrated that it has all the qualities needed to get through this crisis and go on to maintain its position as the Philippines’ clear banking-industry leader. A hard-working, committed workforce who is dedicated to ensuring banking continuity for the needs of customers; a comprehensive drive to expand to the farthest reaches of the country and ensure that as many people and businesses as possible can gain access to its banking services; and a firm commitment towards the consistent evolution of its digital infrastructure are all vital ingredients of the BDO Unibank story and underpin why it will continue to achieve greatness during these uncertain times.