Aboitiz-led Union Bank of the Philippines (UnionBank) has accelerated plans to beef up its digital banking business in anticipation of fierce competition from both local and foreign-owned digital banks.

UnionBank president and CEO Edwin R. Bautista said they have compressed its five-year digital transformation strategy into two years in light of the rapid shifting of more customers choosing digital because of COVID-19 restrictions.

“UnionBank is gearing up for the entry of more digital banks and the anticipated shift towards an open finance environment,” Bautista said during the bank’s annual stockholders meeting. “With the accelerating shift of customer behavior towards digital – which we believe will stay for the long haul – UnionBank is going full throttle in its digital transformation strategy.”

UnionBank Treasurer and Chief Financial Officer, Jose Emmanuel U. Hilado said, however, that they have yet to make the decision if they will apply for digital bank license from the Bangko Sentral ng Pilipinas.

“We have not yet submitted an application, but we are keeping our options open,” he said in a text message. “If we proceed with this it will be a digital mass market bank for financial inclusion.” 

Hilado said they will only go for a purely-digital unit as part of the bank’s plan to expand financial services to the unbanked sector, by extending to them access to digital channels, online payments, e-commerce, and access to digital lending – “that would typically be costly for a bank to even consider.”

“Note however, that as of today, UnionBank is already operating like a digital bank,” he said. “You can open an account using your phone without going to a branch. You can transfer money, deposit checks, buy or sell foreign exchange to name a few of the functionalities available through our app. These functionalities effectively solve the pain points that a typical digital bank aims to address.”

Hilado expressed confidence that as a digitally-transformed bank, they are operating “above and beyond the capabilities of a digital bank” and may not need to apply for a separate license. 

“We already have the balance sheet – capital, loans, and deposits.  We think we have an immediate advantage to ramp-up digital initiatives without having to wait for a separate digital banking license,” he said.

Bautista in his CEO report said UnionBank’s digital take-up has grown by 300 percent, and they currently have more than 2.2 million digital customers onboarded.

About 25 percent of its new clients opened their accounts via its mobile app. Since last year, the bank has an average of 43,000 accounts opening per month, up by 370 percent pre-pandemic.

“Indeed, there is no other way to do banking in this new normal than go digital,” said Bautista. “We will continue to use data science and artificial intelligence to churn out next best offers and develop alternative credit scoring models,” he added.