Transition from legacy to innovation
Technological advancements and innovations in the banking industry throughout the years have been changing the way financial service providers conduct their roles and deliver their services. Banks continue to adapt to compete in the changing landscape.
Bankers Association of the Philippines (BAP) president Jose Teodoro “TG” Limcaoco said the Philippine banking industry has been promoting innovation over the past decades by introducing products and services that aim to make the daily banking experience of clients more seamless and efficient.
“For example, banks have been the leaders of promoting cashless modes of payment. Checks and credit cards, which were revolutionary at the time they were introduced, finally gave customers a daily alternative to cash,” he told The
STAR in an email interview. In 1982, the Philippine Commercial Credit Card Inc. first started offering cashless payment options in the country. “Bankard” was the first credit card issuer in the Philippines. After this, more and more banks were allowed by the Bangko Sentral ng Pilipinas (BSP) to issue credit cards in the country.
Years later, after banks introduced more products and services, the industry moved to digitize transactions and make cashless payments possible amid the stringent and restrictive lockdowns at the height of the COVID-19 pandemic in 2020.
“Today, millions of Filipinos use mobile wallets for their daily banking transactions — which will have long-term ripple effects in addressing key social issues such as financial inclusion,” Limcaoco said.
Banks are also offering different ways for clients to invest their money beyond traditional retail services, he said. These include using mobile banking apps to invest in investment products in the market.
“Banks have rolled out, and will continue to roll out, innovative products and services tailored to customer demand. The industry has been successful in that regard because each bank continues to adapt to the trends and disruption taking place today and in the future,” he said.
According to Limcaoco, banks will continue to pursue and incorporate technical and scientific advances into
Today, millions of Filipinos use mobile wallets for their daily banking transactions — which will have long-term ripple effects in addressing key social issues such as fina ncial inclusion.
– TG LIMCAOCO
their products and services as technology is an ever- changing landscape that affects all segments, sectors and industries.
“To do this, BAP member- banks continue to encourage an environment where accessibility for accounts and services are unhampered by logistics, geography and time,” he said.
“This is an effort which has driven the industry towards modernizing all aspects from operations to customer service and relationship management.”
The banking industry will also continue to pursue financial inclusion as millions of Filipinos remain unbanked. By making the application process more convenient and accessible, more Filipinos would be encouraged to use banks.
Under the BSP’s Digital Payments Transformation Roadmap, the BSP aims to shift 50 percent of total retail transactions to electronic channels and increase the number of Filipino adults with bank accounts to 70 percent by 2023.
BSP Deputy Governor Mamerto Tangonan earlier said that the share of digital payments to total retail transactions further increased to more than 42 percent in 2022 from 30.3 percent in 2021.
Under the Philippine Development Plan, the government aims to further raise the share of digital payments to total retail transactions to between 60 and 70 percent by 2028.
Prior to the launch of the BSP’s National Retail Payment System (NRPS), the share of electronic payments to total retail transactions stood at only one percent in 2013.
However, even though the rise of digital transformation has led to the improvement of quality of banking services, it has also opened doors for cybercrimes, becoming a growing concern for businesses, the BAP chief said.
“Today, cybercrimes are becoming increasingly complex — presenting challenges for the public in detecting these crimes and for banks when it comes to protecting the consumers,” Limcaoco said.
Based on data from the Philippine National Police, cybercrimes increased by 68.98 percent in 2023, with 19,472 incidents compared to 11,523 cases in 2022. It recorded an average of 53 cybercrime cases a day last year.
“With technology being used for nefarious purposes, it is important for all stakeholders — the industry, government, and the public — to work together to completely eliminate these adverse effects,” the BAP chief said.
He said banks should continue to enhance its detection of cybercrime and advocate for reforms aimed at ensuring criminals will be held accountable for the illicit activities they have done that caused harm to clients.
Government agencies should also implement key reforms to update legal and regulatory frameworks related to cybercrimes and ensure that criminals are punished for their actions, he said.
The public must be aware of the latest cybersecurity threats as well, as prevention can help in protecting themselves.
“Today, and in the years beyond us, the industry will face challenges through the continued disruption brought about by technology,” Limcaoco said.
“The BAP will continue to meet the demands of the market in this area by advocating for reforms aimed at maximizing the benefits of technology to the industry,” he added.