BPI’s strong security culture

Published March 19, 2019, 12:00 AM

by manilabulletin_admin

Cezar P. Consing President and CEO Bank of the Philippine Islands
Cezar P. Consing
President and CEO
Bank of the Philippine Islands




By Lee C. Chipongian


Cezar P. Consing announced in April last year that the 39-year old, 20-storey Bank of the Philippine Islands (BPI) iconic building, situated in the corner of Ayala and Makati Avenues, will be torn down and razed to the ground, and on the same site will rise its shiny, sustainable pro-green engineered, new headquarters.

Consing or “President Bong” to the officers and employees of BPI said the new building will take several years to build, about four to five years from 2019, and could be 40-storey in height. “It will definitely be higher than the old building,” he told reporters in November.

It was the last time the BPI management team was hosting a lunch for members of the media in the 1979 building. “Believe it or not,” said Consing, “it was the tallest building in Ayala Avenue (at the time). Now, it’s the shortest.” He does not mean it as least in stature, nor do they intend to surpass the skyscraper standard (which is 40 floors). He said it was not necessary to out-skyscraper every structure in the area. They are BPI, after all, and they’ve stood the test of time, of wars, social conflict and financial crises.

When Consing took over the running and management of the Ayala Group-controlled bank in 2013, his predecessor, Aurelio “Gigi” Montinola III, described him as the person who will bring the bank to its next phase, the digital financial phase of banking business, and to the global stage. Rebuilding the bank’s headquarters is just one more thing he’s helming, but probably the most on-the-ground manifestation of the changes Consing has done – will still do – to the 168 year old bank.

Digital BPI

There’s rapid technological advancement in the last decade or so, and banks have had to keep up. “The speed of change in the world requires that we keep pace. And this requires resources,” said Consing. BPI allots about six to seven percent of its revenues on technology or as much as P6 billion a year, and making it one of the top banks in “a very good position” when it comes to cybersecurity.

BPI is consistent in its IT systems/cybersecurity budget which is the same allocation that most of the large Southeast Asian banks also have, according to Consing. Cybersecurity-related issues are potential systemic risks, as far as central banks are concerned. Excess volatility in the market, for one, is a risk related to cybersecurity.

Consing said their technology team, full-time employees and service workers, outnumber the headcount of most local banks. “That’s how important IT, which encompasses cybersecurity, is to us. We may have to increase the percentage spend on technology, and will certainly have to spend more on building the bank than running the bank.”

“It is imperative that the bank step up its digitalization initiatives,” he added. “Our customers are becoming more digitally savvy, the costs of physical infrastructure and people continue to rise, and we owe it to the Filipino people to bring as many of them into the formal banking system.”

Consing said that right now, “digital access complements physical access; in other words a typical customer will use our branch services and will also access us via online or mobile.” But, he added, “there may come a time when digital access will trump physical access, so we better be ready. We also know that the cost to serve our customers digitally is lower than the cost to serve them via our branches. Lowering the cost to serve will allow us to take on customers in the lower income brackets. Their needs are as important as everyone else’s.”

The bank continues to balance branch networks with digital services and are mindful of the regulator’s rule of a “right balance” in managing cyber-related risks without inhibiting or limiting innovations.

Consing has said that as a bank, and a big bank at that in the Philippines, they counter multiple attempts of cyber-related attacks a day. However, the incident in 2017 was an internal systems glitch, and not a cyber crime hit. Two years ago BPI systems had errors on its internal data processing, and while it caused panic among its depositors, it was quickly resolved and had no impact on the bank’s overall systems.

Around 40-50 percent of BPI clients access their online and mobile banking. The plan is to increase this number to 70 percent of all its customers.
“The world is digitalizing; that’s reality. I can’t worry about it, I just have to make sure that what we are doing as a bank reflects this reality,” said Consing.

Improving access
and inclusive banking

BPI, the country’s fourth largest lender, leads in terms of ATM reach, and expanding in terms of online and mobile banking.

Consing said these transactions will increase but at the moment, it is still smaller compared to branch transactions. “The goal is to get this ratio to 50-50 in the next two or three years. Frankly, it may even happen sooner. An omni-channel strategy is important. One should be able to start a transaction in, say, mobile, and end it in the branch, or vice versa,” he said.

Two years into his job as BPI chief executive officer, Consing’s transforming digitalization plans have already taken shape. By 2015, the bank’s IT budget is in the high-end, regionally. Responsive financial services are changing the way BPI does banking. By being responsive, they have become more relevant.
“We have embarked on our own digital journey, one that should make us better, stronger still, and more relevant,” he said. “The point of relevance is really about financial inclusion.”

Consing emphasized that a digitalized bank is financially inclusive because it can afford to offer banking at a low cost. This has compelled banks to take on the challenge of disruptive innovation to expand markets, make new markets, and evolve as an inclusive business.

It is what Ayala Corp. president and CEO, also BPI chairperson, Jaime Augusto Zobel de Ayala, had wanted the bank to be known for, and why they are increasing the branch networks of its microfinance unit, BPI Direct BanKo. “My chairman and I agree that we have to make BPI truly financially inclusive. It will be good for our country, it will be good for us,” said Consing.

The Bangko Sentral ng Pilipinas (BSP) is a global leader in financial inclusion initiatives and it has advanced its programs through digitalization. Based on a 2018 report, because banks have set up more low-cost access points, about 66.3 percent of all municipalities now have banking presence, with 93.2 percent having at least one financial services access point.

“I think the BSP is right to want digitalized banks, a retail payments system that reduces dependence on cash transactions, and greater financial inclusion. They are all interlinked,” said Consing. “In the old days, central banks would focus on balancing growth and price stability, and supervising the banks. The modern central bank – – and our BSP is very much a modern central bank – – does all that and also pushes for moral initiatives. One has to admire that.”
The BSP reported that the potential for digital payments growth is huge since only 18 percent of account holders use their account for payments. About seven adult Filipinos out of 10 while not owning accounts, do have mobile phones that can be used for digital payments.

Consing said banks are investing more in digitalization. “We’re still at the stage where the digital investments are still being made but they are being made by everybody. Now essentially, you’re going to get to the point that digital becomes much more pervasive and then you may not need as many branches. I think we’re still a few years away from that.”

He said that since prices of smartphones have gone down, this has translated to more digital banking services. “It wasn’t that long ago when smartphones got to a certain price that more people could afford. To do digital, you need smartphones. So, smartphone prices is a key and it’s getting to be much more affordable. It actually helps the whole digitalization effort.”

Not a stereotypical banker

Consing’s former all-wood interior office in the 1979 building – conservative banker written all over it – will most probably be replaced with a modern, eco-friendly, insulated glass design. He used to joke that he could play golf in his office, and break a sweat. It was that big.

He has said that he prefers an office cubicle, or something similar to what he had when he first worked in Hong Kong and Singapore for J.P. Morgan & Co. in 1985. He would later become president of J.P. Morgan Securities (Asia Pacific) Ltd. until he left the company in 2004.

Before 2013, when he became CEO of BPI, he was on the BPI board of directors for 16 years. He was also a partner of Hong Kong-based The Rohatyn Group, an alternative investment company, until 2013.

Consing said that while as CEO, he is focused on caution but not hampering innovation, he is less guarded when it came to his wife, Maribel Consing’s, advocacies. This magna cum laude De La Salle University graduate (A.B. Economics degree, Accelerated Program) with an M.A. in Applied Economics from the University of Michigan, Ann Arbor, is an ardent and devoted vocal supporter of Mrs. Consing’s charity work.

“I’m a cheerleader to my wife’s advocacies – – child feeding and youth education,” said Consing.

On his own, when not running a bank or supporting his wife in her advocacies, Consing plays golf. “I’m a weekend golfer, so nothing to crow about,” he said.

When not hitting golf balls into a series of holes, he’s in front of his TV set or computer, any device with live streaming, or inside a theater or arena to “watch all kind of sports… and movies and plays.”

“Compared to many of my peers, I’m quite sedentary,” said Consing. “Occasionally I’ll bowl tenpins. It’s good to be able to focus on things other than work once in a while,” he said.