UnionBank to expand footprint, invest in ‘digital transformation’

UNION BANK of the Philippines (UnionBank) plans to further expand its nationwide footprint, the bank’s chairman and chief executive said, but with the lender still focusing on digital transformation rather than physical presence.

“We have a plan but it’s not an aggressive plan... We have 300 or so branches, so that’s 10-15 branches a year that we open — some years more, some years less. So on average, it’s just a consistent pace,” UnionBank Chairman and Chief Executive Officer Justo A. Ortiz told reporters in a recent interview when asked if the bank plans to set up more branches this year.

Asked how many branches they plan to put up for this year, Mr. Ortiz said, “I don’t know exactly.”

Edwin R. Bautista, UnionBank president and chief operating officer, previously said the bank has no plans of putting up additional branches this 2017, but has earmarked P3 billion in capital expenses to be used to improve its branches for “digital transformation,” which will include an improvement in its information technology and cyber security.

Asked how much the bank’s capital expenditures could reach should it build new branches, Mr. Ortiz said, “I don’t know how much a branch costs, I think P10 [million] or P12 million, but most of our capex is not branches. We’re investing in digital technology because most people want to start banking on mobile so we need to be able to produce a user experience that’s consistent with mobile — 24/7, highly reliable, secure, private and to some extent, personalized.”

“So most of our investment are not in the physical infrastructure. In fact, we need to think about what the branches will be in the future,” Mr. Ortiz said.

According to the listed lender’s chair, UnionBank wants to give its clients who are not very familiar with the latest technology in digital banking a “different user experience,” although noting that the shift won’t be “an immediate thing.”

UnionBank’s net income in the first three months of the year reached P2.21 billion, 37% higher than the P1.61 billion in earnings it booked in the first quarter of 2016.

Shares in UnionBank lost P1.75 or 2.03% to end at P84.55 apiece on Wednesday.