More than 260,000 depositors have opened digital accounts with Union Bank of the Philippines in the safety of their homes since mid-March this year when the government imposed community lockdowns and border restrictions to contain the health crisis.
“During this pandemic, we are operating digitally, meaning we are able to provide continuous banking service to our customers through the digital channels. We have chat bot, we have online app, we have our web facilities. I think we are the only bank right now that is onboarding additional customers without the customers going to the branches,” UnionBank senior executive vice president, chief technology and operations officer and chief transformation officer Henry Aguda says in a virtual interview.
“During the pandemic, we noticed that a lot of people started downloading our apps. It is so easy. Just download a Unionbank app from the Apple Store or Google Play, take a selfie of yourself, take a picture of your government accredited IDs, and then you get an account open already. Of course, you have to give your KYC [know your customer] information,” says Aguda, who is also the chairman of UBX Philippines, a subsidiary of UnionBank.
“Right now, we are averaging around 1,200 new digital accounts a day, and we see that growing further. Overall, I think we have onboarded close to 260,000 digitally opened accounts,” he says.
“We still have paper, because there are still notarized documents, and there are still cash. But during the pandemic, the volume of transactions in our digital channels is 11 times higher than over the counter, and growing. Last April was the point that digital transactions overtook over the counter transactions. The new customers that we are onboarding, or the 260,000 individuals, If you compare that to the total number of new accounts, about 90 percent plus are opened from the digital channels. There are still new account openings over the counter, but it represents a very small percentage. Over 90 percent are opening digitally,” says Aguda.
UnionBank also allows most of its staff to work from home. “If you take a look at the whole bank organization, around 85 percent of employees are working from home. We can sustain this until things normalize. In fact, if you look at the core of the banking industry, I think we are one of only two banks that I know of whose call center is fulfilled from the homes of call center agents,” he says.
Aguda says this became possible through the bank’s investments in digital infrastructure, including the cloud platform provided by Amazon Web Services. “This is the advantage of having a lot of our work processed on the cloud. If you are too dependent on the data centers, accessing it becomes bandwidth hungry. In our case, we can go straight for most of our computing requirements to the cloud. From home to cloud, cloud to home, things are computed quickly and with less bandwidth. That is why Unionbank has the reputation of having maybe the biggest cloud computing footprint among the banks,” he says.
UnionBank, with AWS support, achieved an “infinite” scaling for workloads, requirements and maximized platform and software as a service offering. AWS, one of the world’s largest technology companies, offers more than 175 fully-featured services for compute, storage, databases, networking, analytics, robotics, machine learning and artificial intelligence, Internet of Things, mobile, security, hybrid, virtual and augmented reality, media and application development, deployment and management from 77 availability zones in 24 geographic regions.
“If we didn’t go with AWS, we would not be flexible in terms of work from home. If all our compute resources are in the data centers, we would not be able to do a lot of work from home. That is partly because a lot of our compute resources are on the cloud. During this pandemic, we have to be very resilient. Our backup and disaster recovery are in AWS. Despite the earthquakes with the Philippines being in the Ring of Fire, we are confident that a lot of our compute resources are outside the country. All of these were approved by the BSP [Bangko Sentral ng Pilipinas],” he says.
Aguda says UnionBank digital account holders can also deposit checks without going to the branches. “We made it easy for them to put in money in their account by just depositing checks. They can take a picture of the check issued to them, and after taking a picture of the checks, it gets deposited to their account,” he says.
“We also made it easy for customers to cash out the money or allow them to disburse it. With their digital app, they can actually send a notification to beneficiaries whether in the province or here and allow them to cash out the proceeds from any of our ATMs or 11,000 cash-out centers. You can cash-out proceeds from Palawan Express, Cebuana Lhuillier, etc. We made it an end-to-end digital banking experience for customers. We would not have been able to do a lot of it, if not for AWS,” he says.
UnionBank has been investing P3 billion in digital infrastructure annually. Aguda says this has enabled the bank to offer digital solutions more rapidly than any other Philippine bank and allowed most of its employees to work from home.
“In fact, our data centers are unmanned at this point, and most of our people from our IT operations are actually working from their homes. This they would not be able to do if most of the compute resources are not in the cloud. So they don’t have to go to the data centers or to the office. They can just manage most of their compute resource requirements at the safety of their homes,” says Aguda.
UnionBank was ranked as the second most helpful bank in Asia-Pacific region during the coronavirus pandemic, next only to KakaoBank of South Korea, according to the BankQuality Consumer Survey on Retail Banks conducted in April. “These are actual customers saying that Unionbank has actually been very helpful during this pandemic,” says Aguda.
Aguda says the coronavirus pandemic was a perfect storm for digital transformation. “People cannot go out of their homes, go to bank branches. Even if the ECQ [enhanced community quarantine] was lifted, we have seen a huge drop in the number of customers going to the branches. Social distancing has highlighted the issue that customers should not line up in bank branches, which Unionbank has always advocated. Our digital infrastructure is intended to do that. With social distancing, all the more you should not have lines in the branches,” he says.
“Unionbank started this digital journey several years back. The things that we have launched in the digital channels are now becoming more and more useful during the pandemic. It was unfortunate that it took a pandemic to get the awareness of everybody that digital transformation that is important,” he says.
“This digital trend is the new normal. Even BSP is talking about experimenting with digital currencies now. They are accelerating their plans for a digital banking industry. This is a wake-up call,” he says. Painfully so in these past six months, a lot of banking customers have been forced to study and learn about digital banking and adapt to digital banking. E-commerce is growing exponentially. Digital payment is growing exponentially, so this trend, after the pandemic, is going to be the new normal.”