"What makes a good bank? P-E-S-O."
The central bank says that in April, our banks reduced their lending by 5 percent. Based on total loanable funds of P10 trillion, a 5 percent cutback is a loss of P500 billion worth of loans to users—big business, SMEs, consumers. The 5 percent is on top of the 4.5 percent or P450 billion contraction in lending in March this year. In effect, our banks have reduced their lending by a colossal P1 trillion.
If P2 million could create one job, a loss of P1 trillion or 1,000 billion pesos meant about 500,000 jobs that could have been created or retained had banks acted with alacrity or cheerful readiness in their lending. The regulations, the central bank and the law require the banks to do so.
Being good means releasing the money from the banks’ vaults to the economy. The economy is showing signs of coming back to life.
The government claims to have vaccinated five million Filipinos, lined up 8.3 million additional vaccine doses this June, and would ramp up vaccination jabs from 150,000 in May to 500,000 in the third quarter and 700,000 in the fourth quarter of this year. That is the claim of retired General Carlito Galvez.
Galvez has a very bad habit. He has this proclivity to make hyperbolic claims. You know, bola (a lie) hypered to high heavens. He thinks he can mass-vaccinate 50 million to 70 million Filipinos by next year, at the earliest—coincidentally, in time for the May 2022 presidential elections where presidential daughter, the feisty Davao Mayor Sara Duterte is the leading contender—per the hyperbolic poll of Pulse Asia.
Sans the politics, the pandemic has become a rare opportunity for banks to be good, and from being good to upscale themselves to being simply great.
Since banks are an invention of man, the pandemic is also an opportunity for great bankers to come forward to show their wares and contribute to helping solve the greatest problem of the century—the COVID-19 pandemic.
What makes for a good bank? Or a great bank for that matter? Four letters –P, E, S, and O.
P is not the Philippine currency. P means people. More than any other time in the industry’s history, the pandemic opens almost limitless possibilities for being people-focused.
E is the environment. Climate change alters how we relate to other species. Global warming means animals, big and small, must move away from the heat. The loss of habitat due mainly to deforestation forces animals to migrate. The interaction among species which should normally be mixing opens possibilities of infections and pandemics. People who live in crowded places and areas with poor air quality are highly susceptible to sickness and death from COVID-19.
S stands for society and solutions. The pandemic has become the gravest existential problem of man and his society. It requires solutions-quick, safe, effective, sustainable. Solutions require money, something banks have in good measure. Banks must now reach out to a larger community or greater society. That means inclusion.
O means ownership. Bankers must deliver good yields to their owners so banks can continue to serve society. To do that, a banker must have enormous skill, unremitting integrity, and a passionate vision of a larger whole. Ownership also means commitment to every stakeholder in the business.
In a November 2020 interview with McKinsey, Ayala Corp. Chair Jaime Augusto Zobel de Ayala defined the challenges for business during the pandemic era. Those are also the challenges for the banking industry.
JAZA said: “Countries will have to use their balance sheets to pump prime their economies and jumpstart economic activity. Different countries will have different levels of commitment to this. I’m more concerned about finding ways to stimulate the demand side of the economic equation, to ignite the willingness of individuals to start spending again, and to encourage a more optimistic view of the future. This will be more challenging than reopening the supply side, which involves allowing factories to start producing again and getting people back to work safely. We need to find ways to inspire confidence, believe in a future together, and begin to act in unison. That will require us to find new ways to cooperate, work in harmony across the public and private spheres nationally, and build on commonalities across regions.”
JAZA has sought to evolve the Ayala Group “to become more relevant to the needs of the country.” “We used to focus on the affluent end of the market in terms of our products and services,” he said. Now, he wants “to leave a legacy of an institution that addressed the needs of the vast majority of Filipinos. It also made sense to grow the institution by broadening and diversifying our market base.” The Ayala chieftain calls it “servicing the larger community.”
In broadening its consumer base, Ayala has “fostered a culture of technological know-how and innovation to address societal needs.”
Edwin Bautista, the president and CEO of Union Bank, has taken the lead to go digital and bring banking services to more Filipinos.
Where people work from home, Union Bank has “Bank from Home”—send money, deposit checks, pay bills and manage account—online.
The technology tack has delivered awesome results for the bank. In 2020, its return on equity was 11.5 percent, down from 15.3 percent in 2019, but up from pre-pandemic’s 8.8 percent in 2018 and not far from the 11.9 percent in 2017.
Technology, says BDO Unibank President and CEO Nestor Tan, “is more an enabler, a tool, rather a threat or a disruptor, thus helping the banks make their services more seamless.” The country’s largest bank has vigorously met the demand of consumers to do transactions anytime and anywhere. Thus, BDO customers have an option to withdraw, pay bills, transfer funds, and even invest—through online or mobile banking. The trick in going digital and thriving in the business is not to focus on technology itself but on maintaining a strong relationship with customers. That, BDO is doing. Digitalization has enabled the Henry Sy bank to pursue inclusive banking.
Metrobank has rebranded itself to deliver “meaningful banking” to “keep our promise of keeping customers in good hands,” said Metrobank president Fabian Dee.