RCBC all-digital bank also inclusion super app, says EVP

As Yuchengco-owned Rizal Commercial Banking Corporation (RCBC) ramps up its digital transformation, it will launch an all-digital bank that will drive financial inclusion in the Philippines.

“RCBC will be launching an all-digital bank and it will be sooner rather than later. The company is not afraid to look towards the future and accept that legacy banking may be a thing of the past. A peek into what we have ahead: this new product will not only be an all-digital bank but also an inclusion super app — with an array of services that is more than what is offered in the market today. Exciting times are coming,” Lito Villanueva, EVP and Chief Innovation and Inclusion Officer of RCBC, told Digital Life Asia.

Financial inclusion

Villanueva is concurrently the Chief Digital Transformation Advisor of the Yuchengco Group of Companies (YGC). He emphasized the important role that digital transformation plays in financial inclusion.

“I believe that digital transformation is the wrecking ball that will bring down real and perceived barriers to financial inclusion for Filipinos. For one, majority of Filipinos already own mobile phones and are connected online. If we could bring financial services to their electronic devices, then we do not only have one foot in the door but we will literally be inside their homes. Well, digital transformation is not just about technology or devices. It is about mindset, culture, and people,” Villanueva said.

Villanueva is the former managing director of the MVP Group of Companies’ Voyager Innovations. Voyager nurtures the group’s fintech startups, including PayMaya and Lendr. As such, Villanueva is known for driving the growth of fintech in the Philippines. In fact, BizNewsAsia named him “Mr. FinTech of the Philippines”. He is also the founding chairman of FinTechAlliance.ph, which brings together strategic players in the digital finance space.

Full circle

Banking, however, is actually in his roots. Early in his career, Villanueva spent five years in the Land Bank of the Philippines. He was chief of division in its Overseas Correspondent Banking Department under the Global Banking Group. Looking back, he said this stint may have positioned him for his mission of financial inclusion.

“Twenty years since and after my work in payments, telecommunications, and banking, including consulting and advisory work in local, multinational, and international institutions spanning over 30 markets and involving many fintech players, I have come full circle. It was not a difficult transition as I have returned to banking with the same mission to bring financial inclusion to the unbanked and the underserved. At the same time, fintech players and banks are no longer at odds with one another but are instead more collaborative. There is much work to be done to service all Filipinos and there is enough room for all of us. Open banking or open APIs is now the name of the game. In short, it is about collaboration,” Villanueva said.

RCBC’s digital transformation

What were some of the biggest challenges that Villanueva encountered in spearheading the bank’s digital transformation?

“When I joined RCBC in 2019, it was among those in the lower end of the 10 biggest banks in the Philippines in terms of assets. Its number of clients also ranked around the same position. However groundbreaking the digital initiatives that we come up with in RCBC, it will be for naught if there was no one to avail of them and sustain their use. So, building a sizable consumer base and getting the word out on the work we’re doing in the company were among the biggest challenges that we had to overcome.

“Thankfully, Ms. Helen Yuchengco Dee, chairperson of the Yuchengco Group of Companies, our President and CEO Eugene Acevedo, and the entire senior management team were very supportive of the bank’s digital team. The environment encourages innovation from our end and provides the impetus to make things happen. In fact, in the first few months since assuming my role as chief innovation and inclusion officer and head of the bank’s digital enterprise and innovation group, Chairperson Dee and President Acevedo approved the creation of the bank’s digital committee. I think this is the first legacy bank to have created a dedicated digital committee to ensure that it can quickly evaluate, assess, and approve any digital initiatives. This shows the seriousness in embracing digital transformation, including the investments in digital. Proof that this is not lip service,” Villanueva said.

Not cashless, but cash-lite

The COVID-19 pandemic has forced people to stay home and practice social distancing. Because of this, more Filipinos have embraced the digital lifestyle, including cashless transactions. The goal in the Philippines, however, is to go cash-lite, Villanueva said.

“We are not aspiring to have a cashless society. What is more appropriate is a cash-lite digital economy. The COVID-19 crisis was a big push to bring clients into digital,” he said.

He said they have observed three-digit exponential growth in digital signups, app downloads, and electronic channel usage.

“The situation has advanced our targets of adoption by at least a couple of years. Keeping customers in our digital facilities beyond the pandemic will be the true test of this shift. Whether they remain out of necessity or preference. For example, hitting Php2B in transaction value from our ATM Go service in just less than five months versus having that same figure in October 2019 or in 10 months. Our InstaPay transaction value and volume, and ATM cardless withdrawal hitting over 430 percent and 841 percent, respectively, during the lockdown are some of the examples,” he said.

Traditional vs digital

With the upcoming launch of the RCBC all-digital bank, how does he see traditional banks stacking up against all-digital ones?

“What traditional banks have going for them at the moment is the trust that they have earned throughout the decades of their operation. And trust is the currency by which financial institutions operate. However, as it is, a good number of Filipinos are still wary of handing their hard-earned money to others. Many keep their cash inside their homes or refuse to take advantage of the wide choices of financial products available to them.

“Projections, however, point that this may soon end with the growth of the young population. Many of whom are digital natives, who have lived their whole lives with electronic devices by their side. This seamlessness by which they live their lives with technology could be transferred to the management of their finances and the use of digital banks. The country’s edge over emerging markets is our demographic dividend, i.e., having one of the youngest populations in the world with a median age of 24, among other things,” Villanueva said.

Collaboration, not competition

For years, the growth of digital has been disrupting the banking industry. Most recently, non-traditional players are looking to further shake up the status quo. For instance, ride-hailing giant Grab is partnering with Singtel for a digital full bank license in Singapore. Meanwhile, gaming company Razer’s fintech arm wants to create the world’s first global youth bank.

As the industry evolves and embraces open banking, however, Villanueva sees the entry of more players as a good development.

“I honestly welcome the arrival of more fintech players in the industry. Remember what I said — collaboration through open banking is the name of the game! Filipinos will stand to benefit with more competition.

“I only hope to see more homegrown companies taking part in this exciting time in the fintech industry. The local market has its own peculiarity that can be more addressed by Filipino players. So, that’s something I wish to see, too,” he said.

In pushing digital transformation, Villanueva also does not discount the possibility of RCBC supporting cryptocurrency and blockchain technology.

“We welcome any enabling technologies. Since trust is our commodity in banking and in any transactional relationship, proper due diligence is required. A thorough risk and security assessment would have to be made. We owe that to our customers and the public in general. Technology is an ever-evolving space. More and more advanced innovations will be in our horizon to benefit mankind,” he said.

So, are you looking forward to the launch of the RCBC all-digital bank? Stay tuned.