Thrift banks see higher growth in consumer loans with Internet-based financial technologies that enable digital banking on mobile phones.
“We’re starting to do that also for mortgage and consumer loans for the noncore banking. But we’re gradually moving into the core,” President of the Chamber of Thrift Banks Gregorio B. Anonas III said last Friday at its general membership meeting in Shangri-La Hotel in Makati City.
Since the Bangko Sentral ng Pilipinas allowed access to the cloud that electronically stores data and streamlines transactions of bank clients two years ago, thrift banks have been offering more individuals loans for personal, family and household purposes.
“Everybody is moving toward digital banking because it is cheaper.
The coverage of digital platforms is not yet major. But in my bank, Wealthbank, we use it for loans. I approve automobile loans now on my phone,” Anonas added.
Financial-technology companies, such as FINTQ of PLDT, and lifestyle brands for digital banking, such as Vietnam’s first digital bank Timo, offer digital-platform set-up for free.
At present FINTQ, the country’s largest digital financial-services platform provider, covers 100 percent of the provinces and 90 percent of the cities. It has released loans worth over P23 billion through Lendr, its digital
loan service, to 25 partner banks.
“We have to adapt, and we keep on telling our clients and employees about its advantages. We need to go digital if we want to be competitive,” Anonas said.
Timo, on the other, is in search for one bank partner in the country to provide traditional loan products online that is reflective of the lifestyle of the millennials.
“We know how [much] building a bank branch cost, so we want to lower that costs. But, also, banks are often constrained by predigital banking, so we have to adapt to the millennials, and we have the expertise in digital market,” Timo CEO Claude Spiese said at the meeting.
After its launch last year, the firm attracted 55,000 clients in Vietnam that have a 46-percent population group aged 25 to 35.
Thrifts banks also expect digital banking to complement the proposed tax-reform package by the Department of Finance (DOF) in encouraging more opportunities for consumption.
“With digital banking, we expect more loans for automobiles. And with the tax reform, I think there will be more loans because the taxed products are marginal, so there will be tax savings for consumption and loans,” Anonas said.
The proposal aims to reduce personal-income tax, expand value-added tax (VAT) on vices and increase tax on oil and petroleum products and automobiles. The DOF promised staggered hikes to accumulate funds for long-term public projects, mainly the P7-trillion infrastructure proposal of the Duterte administration.
Thus, thrift banks believe the clients can adapt to the tax increases and maximize their consumer loans with more and better infrastructures and services to be laid out under the tax proposal.
“It’s good that they are all balanced. They are trying to lessen the impact, so it will be over time. I like the VAT because you should pay for what you consume. I think the tax-reform package will be a winner,” Anonas added.
However, thrift banks remain cautious in employing it to core banking, which mainly involves deposits, amid the cyber-security attacks to banks worldwide.
“As of this point, we don’t want to use it on core banking. First is the risk. You don’t want them to be hacked. Until we are confident enough that the cloud financing can secure them, we will be comfortable with using digital for the core,” Anonas said.
Last year Symantec, a cyber-security firm, reported a group of hackers dubbed “Lazarus” infiltrated the system of an unnamed Philippine bank as its fourth victim. According to the report, the hackers stole $101 million from the Bank of Bangladesh and transferred it to accounts in Sri Lanka and the Philippines.
“The core technology will take a long time. Give us a couple of years. We have been using digital technology for two years now, but it took us some time to learn it,” Anonas added.