While CEOs here and abroad are mouthing the buzzword “digitalization”, the head of the country’s largest commercial bank BDO Unibank thinks the concept of digital as a little bit “overplayed.”
At the Management of the Year “A Year of COVID – Gloom or Boom?” panel discussion by the Management Association of the Philippines (MAP), BDO Unibank CEO Nestor V. Tan pointed out two key points: digital will be largely used for BDO’s payment transactions, and it cannot go ahead of its customers’ level of comfort.
“I think the concept of digital is a little bit overplayed because we are in a situation wherein we’re seeing our basic habits changed that instead of going through the ATM, we go through mobile phone or computer and that is good, that is where we are supposed to go,” Tan said.
But while COVID has forced everyone to go through digital payment, Tan said payment is but a very small portion of doing banking transaction digitally. The larger banking transactions have to wait before riding on to that digital bandwagon, he said.
“How many of us would be comfortable getting a mortgage digitally, how of us are really comfortable making sure that our documents are digital without us having to hold anything to prove that the transaction did occur. Those things will take time, so in my view what happened with COVID is it accelerated digital transformation in business but am not sure if it is going to really bring us towards a big step digitizing commerce,” said Tan, who was MAP's Management Man of the year 2019.
According to Tan, there still a “lot of runways to go before we are able to do that” stressing that banks can only “move as far as the market is willing to accept it.”
He called it a little bit of arrogance if the banking sector will think that if they digitize, people will move. “I don’t think it works that way, I think we are actually at the mercy of customers to transact with us,” he said.
He cited his own arrogance when 25 years ago, he thought that passbook was not really something that his bank should be working on. “Twenty-five years hence, and passbook is still here because our customers like it,” he pointed out.
But he also equally stressed there should be no mistaking that digitization is taking place. The thing is, he said, “We have to be cautious that we don’t go ahead of what people are willing to accept. We have to keep pace with the people.”
He cited the good job of digital payment platform GCash, which is trying to keep pace, thus, other banks are keeping pace as well. “If certain areas of banking are moving in that direction then the smarter bank will have to follow, but you will probably have a hard time building a digital capability and hope that the others or the market will just adapt it,” said stressing the market must first be “comfortable with it.”
At BDO, Tan said they do have digital wallet Cash Card alongside normal accounts. They have been able to effect digital payments although admittedly not as efficient as the GCash.