Tech investment still an issue for financial institutions

MAJORITY of financial institutions in the country do not show willingness to risk on digital investments, hindering target to increase financial inclusion, a report by FINTQnologies Corp. (FINTQ) showed on Thursday.

In the third volume of the FINTQ, the technology unit of Pangilinan-led Voyager Innovations Inc., crafted a new framework to examine local financial institutions’ digital readiness — Commitment, Awareness, Readiness, Adaptability or CARA.

Using the CARA model, the report scored the respondents from 0 to 100, identifying them as “digital laggards”, with score of 40 and below; “pack followers” with 41 to 60 score; and “path breakers” who had 61 and above.

Under the study, which polled 76 finance executives, 80 percent of the financial institutions lack the capacity to make their systems digital-ready, with no clear digital transformation roadmap nor e-banking platform.

The report mentioned financial institutions are “in “waitand-see” mode testing whether digital technologies could bring about direct, immediate, and substantial benefits for their customer base and bottom line.”

“The biggest barrier to their adoption is their willingness to invest in digital technologies. This has profound consequences because as our report shows, the ‘readiness quotient’ heavily influences the bank’s level of ‘commitment quotient’ to bring its business towards a digital economy,” FINTQ Managing Director Lito Villanueva was quoted as saying in a statement.

Out of 76 respondents, only 14 were identified as “highly ready for DX” or digital transformation.

“Of these 14 financial institutions, four have extensive readiness to go digital, which means they score 81 and above out of a perfect 100. Two thrift banks, one cooperative, and one rural bank show a high level of readiness to go digital,” the report said, without disclosing the identity of the firms.

FINTQ together with the Bangko Sentral ng Pilipinas Chamber of Thrift Banks (CTB), Rural Bankers Association of the Philippines (RBAP), and the Microfinance Council of the Philippines (MCPI), launched the Road to 20 by 2020 campaign in a bid to equip financial institutions with solutions and strategy to fully embrace modernization.