Aboitiz-owned Union Bank of the Philippines (UnionBank) will consider applying for a digital bank license to support its agenda for financial inclusion.  

UnionBank chief financial officer Jose Emmanuel Hilado believes the bank is already a digital bank after years of digital transformation, but they may still apply for a separate license under the new bank category to be set soon by the Bangko Sentral ng Pilipinas (BSP).

 “Applying for a license for a digital bank is one of the options open for UnionBank and if we do pursue that, that will be most likely dedicated for financial inclusion,” said Hilado during the Aboitiz Group’s third quarter media briefing late Wednesday.

 But, he said, “actually it’s already a digital bank by itself” – referring to UnionBank’s digital financial products and services that they have developed over a period of four years.

 He said that before the BSP circular on digital banks – expected to be issued within the last two months of the year – they have provided financial access to clients via its digital platform.

 “If you really look at what defines a digital bank, we believe that UnionBank currently, because of the digital transformation that we have undertaken … can be considered a digital bank because you can open an account using (our) app. You don’t have to go to the branch,” said Hilado. “You can do a lot of transactions using your phone, you can transfer money, you can deposit checks using your phone. You can buy or sell foreign exchange using your phone.”

 Since 2017, the bank has The ARK, its fully digital banking branch. The ARK has 50 branches. Under the BSP’s digital bank category, a digital bank should be using a purely digital platform and/or electronic channels “with minimal to no reliance” on physical touchpoints. It will not have a branch or branch-lite unit.

 “Given the platform that we have, the bank is actually more than what you would consider a digital bank,” said Hilado. “We’ve addressed most of the pain points for clients which is the reason why digital banks have started coming up. So in our case, we think we already are in a good position. We feel that we are a digital bank but if we do pursue a separate license it will be for a specific purpose,” he added.

In the meantime, amid the COVID-19 pandemic, UnionBank has continued to deliver digital-based services. Hilado said the bank’s digital transformation has made it a “fast and agile institution”.

“Despite the continuing pandemic that has greatly impacted the Philippine economy, (the bank) continue to register solid growth, especially as it delivered more innovative digital banking solutions for its customers,” he said. The bank reported a net profit of P4.2 billion in the third quarter, up by 11 percent year-on-year, while its year-to-date numbers were down by 0.9 percent to P8.5 billion because of higher loan loss provisioning.

Hilado said the latest income results is “proof of the bank’s success in digital transformation” and that this shift to digitalization “has enabled the bank to future-proof the business by giving it agility and resilience in the face of major disruptions such as the COVID-19 pandemic.”

 “We are confident that UnionBank will remain firm in its commitment to meet the needs of its clients not only during this time of crisis, but in the years to come,” said Hilado.

For the July to September period, UnionBank had 1.5 million retail digital customers, 500,000 more from what they had in the second quarter. About 335,000 of these new clients opened digital accounts via the bank’s app.