Technology

BPI on evolving role, encouraging Gen Z to save

New BPI president and CEO Jose Teodoro “TG” Limcaoco wants to cement BPI's position as the undisputed leader in the Philippine digital banking space. Image credit: BPI
New BPI president and CEO Jose Teodoro “TG” Limcaoco wants to cement BPI’s position as the undisputed leader in the Philippine digital banking space. Image credit: BPI

Quoting Charles Dickens, BPI Chairman Jaime Augusto Zobel de Ayala said “it was the best of times, it was the worst of times” for the bank in 2020. And as the oldest bank in the Philippines — and in Southeast Asia — formally welcomed its new president and CEO Jose Teodoro “TG” Limcaoco on April 22 after its board meeting, BPI emphasized the evolving role of banks as they navigate the changing digital landscape and the preferences of consumers across different generations and channels.

“In the old days, people wanted to see the cash in the vault. Today, you don’t see the cash in the vault. You know your money’s there, but it’s in data form. And therefore going forward, the successful banks are the ones with the name that people can trust that the data is safeguarded, that the data can be used by themselves, and that the cost of using is actually cheap or actually positive because their data grows, or their wealth grows. And that’s why people love the concept of digital banks. I think there will be people who will come into the Philippines trying to set up a digital bank, but they will always be at a disadvantage to BPI which has the name and the physical infrastructure to attract the customers,” Limcaoco said.

Digitalization and data analytics

Outgoing BPI president and CEO Cezar “Bong” P. Consing, who literally passed the baton to Limcaoco via video, is retiring after successfully steering the bank towards its position today as the second largest bank in the country in terms of market capitalization, and a leader in digital banking in terms of users and transactions. Under his leadership, BPI has also become one of only two Philippine companies with a BBB+ credit rating from Standard & Poor’s.

Limcaoco said he will build on Consing’s strategy and achievements, while saying the bank will become even more focused on the customer. He stressed the importance of data analytics to build products tailored to different customer personas and provide a better customer experience across all touchpoints, whether digital platforms or physical branches.

This is the second year that the BPI Annual Stockholders’ Meeting has been held virtually due to the COVID-19 pandemic. And 2020 was indeed “the best of times, the worst of times” for BPI, which not only overcame the challenges posed by the pandemic, but also saw a surge in digitalization.

For full year 2020, the bank cited the following figures for digital banking: 2,574,352 mobile app downloads, 32.9M million Transfer to Anyone transactions worth Php174 billion, 8.4 million Inter-bank Fund Transfer transactions worth almost Php137 billion, and 59.1 million transactions via open banking worth Php131 billion.

Hyperlocal = hyper-personalization

The surge in numbers for BPI digital banking transactions was driven by the transformation of consumers into hyper-transactors during the lockdown, according to BPI Chief Operating Officer and Head of Enterprise Services Ramon L. Jocson. He said this again underscores the importance of data analytics in identifying and addressing changes in consumer behavior.

“As they became hyper-transactors, we noticed that the cause of that was because markets went hyperlocal. So neighborhood stores popped up. And as neighborhood stores popped up, people started using our app — the funds transfer application — for payments. Whether GCash, PayMaya, or the BPI app, they started paying each other [using these apps] for food and so forth because they don’t have POS terminals. So no cards were used, so funds were being transferred and so on. So we noticed that most of it was Gen Z,” Jocson said in response to a question from Digital Life Asia.

“Because of this, what we are doing is with analytics, we suddenly realize that what you need to do, in order to make ourselves relevant in digitalization, we have to hyper-personalize. So meaning to say, there are probably several of you, Joey, who buy at a certain level using GCash, or PayMaya, or Lazada, and the movement of your money is across these three. So we need to understand that and fashion out a product for that. That’s the challenge for the banks. So hyper-personalization is important. Digitalization is enabling you through technology, but you need to have analytics, and then you need to have the process to capture it, and then hyper-personalize it so that certain demographics can be served,” Jocson said.

Educating next generation

Apart from providing the digital and physical infrastructure and understanding changing consumer behavior, however, banks also need to educate the next generation of customers on financial management, said BPI Family Savings Bank President Maria Cristina L. Go.

Go was responding to a question from this writer, on how banks can encourage people to open a deposit account, which has been a challenge for years, since the main reason for many customers is that they are only forced to due to payroll accounts. The banking industry is being disrupted by the convenience of using e-wallets such as GCash and PayMaya. Not only that, but with the growing popularity of blockchain and cryptocurrency, many people, particularly younger users, are embracing Bitcoin, Ethereum, Dogecoin, and other cryptocurrency; buying and trading NFTs (non-fungible tokens), which are dramatically changing gaming and collectibles; and investing in stocks and market funds through mobile apps, such as the GInvest feature of GCash. With all these alternatives, how can banks convince the next generation of customers to open deposit accounts when they only offer low interest rates for savings?

“In the past year, we actually received a number of invitations from the Gen Zs to speak in their various webinars. Different youth organizations who are now more woke about financial management. So we’ve seen the shift from the YOLO mindset to a woke mindset,” Go said.

She said this was one of the positive outcomes of the challenges posed by the COVID-19 pandemic — that millennials and Gen Z are now more aware of the need to become financially responsible.

Evolving role of banks

“So part of that is really educating our Gen Zs and millennials as to how to manage their finances. And when you think about financial management, it’s more than just spending, it’s more than just payment. As TG said earlier, it’s savings. Making sure that they set aside [some of their finances] as part of savings. And therefore, when you think about this as overall financial management, we have to develop the right products and the right services for the Gen Zs and the millennials. Digitalization will be key because these are digital natives. We’ve done a survey, and a lot of them will not want to go to the bank. They even have the mindset that the banks have too many requirements,” Go said.

“Second would be easier products to understand, and easier products to help them navigate through the financial options that they have. As you mentioned some of them are actually quite interested in investments, but we have to be careful to make sure that when they do invest, they understand what are the implications of that. Because remember investment products are non-guaranteed instruments of the bank. So part of what we will do in the bank is continuous education, particularly among the young, to make sure they are on the right path towards greater financial responsibility and discipline,” she said.

Go’s emphasis on education underscores how digital transformation is not just about technology, but is, in fact, more about people. Banks will have to continuously adapt not only because of disruptive technology, but also because of the different mindsets of customers — including those who have fully embraced digital, and those who still prefer traditional channels.

At the end of the day, Southeast Asia’s oldest bank is betting that after almost 170 years, BPI is still the bank that Filipinos will trust.