Conversation with TG Limcaoco, BPI’s new president
In my admittedly biased view, I believe BPI continues to be the most prestigious and trusted bank in the Philippines and is the bluest of the blue chips
As a follow-up to my recent articles on fintechs and Open Banking, which were based on third party research information, I thought it would be interesting to hear directly from the horse’s mouth, so to speak. I decided to look up an ex-colleague from my previous life many moons ago. I refer to the recently appointed president of the Bank of the Philippine Islands (BPI), Jose Teodoro Limcaoco, or TG for short, a mathematician and a blue-blooded Atenean who lustily cheers for the Blue Eagles.
It may not be known to many that BPI is the oldest bank in the country, as well as the whole of Southeast Asia, dating all the way back to 1851. By royal decree of Isabella II, the Queen of Spain, BPI, then known as Banco Espanol Filipino, was granted the authority to print the very first Philippine currency.
In my admittedly biased view, I believe BPI continues to be the most prestigious and trusted bank in the Philippines and is the bluest of the blue chips whose moves are closely watched by peers and could be considered as the barometer of where the industry is headed. So, I thought who better to chat with about Open Banking than BPI’s brand-new president, who has described himself in other interviews as a “digital geek.”
TG, as his usual self, was very accommodating and kind enough to spare some time over the weekend to share with me his thoughts about the pandemic-induced, newly-found preference of most Filipinos for cashless online banking and e-wallet transactions. Since it was essentially just a conversation with a friend to catch up and be informed rather than a formal interview, I decided not to record our chat. So, with advance due apologies to TG in case I may have misunderstood some of his thoughts, allow me to paraphrase snippets of our conversation based on my recollection.
What Open Banking will mean to the customer
TG believes the face of the banking industry as we know it now will definitely change, brought about by the never-ending exigencies we are facing due to Covid. But fortunately, the consequent inconveniences of daily life have also been eased by the advances in financial services technology, which is destined to lead to even greater customer satisfaction.
BPI’s main mission of the delivery of “delightful customer service” — another quotable quote from TG that I recall from another interview — will definitely be facilitated by the evolving momentum toward Open Banking, prompted by no less than the industry’s regulator, Bangko Sentral ng Pilipinas (BSP), who has seen the significant progress made in other countries.
The ownership and control of the customer’s data by the customer is the gateway to BPI’s avowed goal of customer inclusivity and sustainability, and Open Banking could very well be the key that will unlock it.
Impact of fintechs on the banking industry
Undoubtedly, fintechs will erode market share, particularly on deposits, given their very aggressive interest rate posturing, but perhaps not enough to shake the tree for the incumbents. It also remains to be seen how the fintechs will be able to profitably deploy these higher costing funds.
Given the penchant of Filipinos for cash, fintech customers will also have to come to grips with their inevitable need to convert their digital money into actual cash. Will the attendant fees that will be charged for cash withdrawals prove to be a major turn-off?
What is BPI doing to be in tune with the clear signals of the market?
A significant chunk of BPI’s massive branching network will undergo a physical transformation that should delight customers. It will be segmented and driven by unique customer preferences. We will soon be seeing flagship sales-oriented branches that will enable customers to experience in one location servicing and delivery of their particular needs, whether it be via the youth oriented digital mode or via the traditional hand-holding preference of the well-heeled private banking customers.
Undoubtedly, fintechs will erode market share, particularly on deposits, given their very aggressive interest rate posturing.
Furthermore, with the Ayala Group’s extensive reach into the country’s ecosystem, don’t be surprised to see BPI in the future rolling out a suite of varied non-traditional banking digital products — my own wish list — assuming of course this will be allowed by BSP, which currently permits banks to sell only traditional banking products.
What is needed to make Open Banking a reality sooner than later?
Realistically, the banking industry, particularly the big boys, will need to be prodded by the BSP to fully open up to all comers perhaps by fiat as some countries have done.
Thoughts about the impact of Covid
Unless arrested soon, Covid will wreak irreversible havoc on the SME who have been hanging on for dear life for the longest time. NPL will inevitably rise. Peso will further weaken as the BSP will continue to rein in interest rates to steady the ship.
Until next week… One big fight!