Banks ramp up investments in digitalization, AI
Banks operating in the Philippines continue to invest heavily in information technology, including artificial intelligence (AI), as they pursue their respective digitalization journeys.
Security Bank president and CEO Sanjiv Vohra said the listed bank continues to ramp up investments in IT and its human resources.
“We are in a multi-year phase of investments in technology and people to improve customer experience and prepare us for future growth. In the first nine months of 2023, our technology spend as a percentage of our total revenue was around 12.6 percent,” Vohra told The STAR.
Vohra said Security Bank rolled out a new Tellering System throughout its branch network, including our Wealth Hubs (for wealth clients), as well as its new Human Capital Management System.
“We have partnered with ACI Worldwide in modernizing our payments hub to enable us to roll out innovative products and services faster and more efficiently,” Vohra added.
Eugene Acevedo, president and CEO at Rizal Commercial Banking Corp. said the bank sees an increase in capital expenditures from previous years.
“A sizable amount of which will be spent on IT and cybersecurity, as well as enhancements in some of the bank’s platforms, such as wealth management and consumer lending systems,” Acevedo told The STAR.
BDO Unibank Inc. owned by the family of the late retail and banking magnate Henry Sy said it continues to spend a considerable amount of capital expenditures at IT and digitalization.
“Digital investments are being undertaken to upgrade technology stack, improve operational efficiency and strengthen cybersecurity,” the country’s largest bank said.
The amount of investments of Aboitiz-led Union Bank of the Philippines for IT is tapering off after starting its digitalization journey earlier than other banks operating in the country.
“We are still in the process of finalizing our budget for 2024 but it should be significantly lower than the last two years.
However, the listed bank is infusing more capital into Union Digital Bank Inc. as it is looking at raising as much as P10 billion through a stock rights offering or by selling shares to existing shareholders.
“We recently got approval to infuse additional capital of up to P1.8 billion. However, drawdown will be contingent on how they grow their earning asset portfolio,” Union Bank added.
Jose Teodoro “TG” Limcaoco, president and CEO at Bank of the Philippine Islands, told The STAR the Ayala-led bank typically invests 10 percent of total revenues for IT spending.
“We typically allot about 10 percent of our revenues to technology spending,” Limcaoco said.
Amid the ramp up in investments in digitalization, Philippine banks continued to pursue their respective branch expansion.
BDO, the largest bank in terms of total assets, loans, deposits and trust funds under management, has over 1,700 consolidated operating branches and more than 4,800 ATMs nationwide.
It also has 16 international offices, including full-service branches in Hong Kong and Singapore in Asia, Europe, North America and the Middle East.
The Sy-led bank has raised a record P63.3 billion via the issuance of ASEAN sustainability bonds to diversify funding sources, as well as finance or refinance eligible assets as defined in its Sustainable Finance Framework.
For his part, Limcaoco said BPI plans to upgrade at least 50 branches under its branch transformation program.
Vohra said Security Bank is accelerating branch openings to close 2024 at approximately 345 total branches.
In terms of branch expansion, Vohra said the listed bank opened five to six branches in the final quarter, bringing the total branch count to around 325.*