MORE TRADITIONAL Philippine banks are acquiring financial technology (fintech) solutions as the coronavirus pandemic and increased competition from digital banks helped accelerate customers’ online shift.
“I think that (digital shift) is driving them to look at fintech solutions in a much more positive manner. With the kind of prospect list that we have, and I’m sure our peers have, I think 2023 will be a good year from that perspective as we come out of the pandemic,” Intellect Design Arena Fz LLC Chief Executive Officer Rajesh Saxena told BusinessWorld in an interview on Wednesday.
Intellect Design Arena is an Indian multinational fintech solutions company and is the parent of Intellect Design Arena Philippines, Inc., which has been operating here for 10 years.
Traditional banks have also seen increased competition from digital banks like Maya Bank Inc., Tonik Digital Bank, Inc., and UNO Digital Bank, as well as platforms with embedded finance functions like Grab Philippines.
“I think what banks are also seeing is, is there a way for them to also acquire some of the capabilities that are in a digital ecosystem?… So, I think those are some of the reasons banks at all are reviewing what their footprint on the digital would be, keeping in mind neobank competition,” Intellect Design Arena Executive Vice-President and Asia-Pacific Head Paramdeep Singh said.
Mr. Saxena said Philippine banks are aware and are looking at fintech solutions, adding that the market has seen a lot of traction over the last two years.
“[Digitization] is becoming so important for banks here, and maybe Philippine banks have not in the past invested as much on the digital side as many other markets outside Philippines has,” he said.
“It’s a catch-up phase.”
Intellect Design Arena Philippines Strategic Advisor Herminio M. Famatigan, Jr. added that he sees banks working to digitalize to become more accessible to customers.
Mr. Saxena added that like other countries in the world, the Philippines has moved towards digitizing payments, with the central bank leading the charge.
The Bangko Sentral ng Pilipinas wants to digitize 50% of all retail payments by the end of this year.
Mr. Saxena said there are still several roadblocks to digitalizing payments in the Philippines.
“I’m told that we still use cheques here. We were talking to one of the banks and they were saying, do you have cheque printing capabilities? In some of the markets where we are doing our solutions, nobody likes cheques,” Mr. Saxena said.
Banks are also looking at solutions to improve their know-your-customer (KYC) processes and loan origination, he said.
Banks are also seeing higher costs, with their revenues “being squeezed out because of competition,” Mr. Saxena said.
Mr. Singh added that banks are also struggling to change their old IT platforms as updating can be costly.
Mr. Famatigan said another issue is legacy costs, which can be addressed by modern technology and solutions. — Aaron Michael C. Sy
This article originally appeared on bworldonline.com