Union Bank is setting up its own digital bank brand, joining three other fintech companies that have already started operating in the country. After successfully securing a license from the Bangko Sentral ng Pilipinas (BSP) in June 2021, Union Bank’s ‘UnionDigital,’ is expected to operate by July this year.
The other digital banks that have already started account openings are Singapore-based firm Tonic Bank, PayMaya’s Maya Bank, and Land Bank’s Overseas Filipino Bank (OFB). Two other banks expected to follow suit are Gokongwei Group’s GoTyme, which is eyeing to launch by mid-2002, and UNOBank by Digibank Asia.
“We are projecting that it will launch this July,” confirmed Erika Dizon-Go, UnionBank’s First Vice President and the Head of Fintech Group. “We’re expecting to hit the ground running,” she said during a webinar to launch the new company. “We are hoping that this new financial platform could contribute largely to the entire banking business.”
At the height of the pandemic, UnionBank’s digital business recorded very high growth, with its digital accounts increasing by 767 percent. The usage of UnionBank’s online app, meanwhile, expanded by 535 percent. The value of transactions also grew by over 500 percent.
Go added that UnionBank’s open finance allowed more than 1 million of its users to link their accounts to e-wallets and e-commerce platforms. Open banking means consumers were giving permission for their data to be used in fintech apps and similar other solutions. This way, financial institutions are able to share the information with third parties relating to accounts or payments.
“Our main objective is to look across the sector and see which ones are highly being used by the general population. At the end of the day, the use cases are what drives open banking,” adds Go.
With UnionDigital, the bank is hoping to increase further the rate of adoption to 2 million by the end of this year. It adds that it will continue to find more applicable use cases, such as investment companies or stock brokerages, where the bank’s clients could link their accounts to invest.
Digitalization to help reach the unbanked population
Even before the onset of the COVID-19 pandemic, UnionBank has already been pushing for digitalization. It has earlier launched The Ark to showcase the bank’s latest technological offerings in the banking space.
Go said they are expecting fierce competition in the digital banking business, especially from foreign banks. “The digital banking market is new so there will be rivalries to get the most clients. But the market is still large enough,” she said. “In fact, there is still a huge population of unbanked individuals waiting to be reached by banking networks, either at the physical branches or through digital means.”
Still, according to Go, the main competitive edge of a digital player is its ability to provide the service to its customers, and its ability to reach segments that need to be reached.
“We expect to grow our share in the penetration of the unbanked segment, and we hope to be able to contribute to the BSP’s goal of achieving 70 percent of adult Filipinos having a formal bank account by 2023. We are looking to be a major participant in achieving this goal,” Go added.
UnionBank is a joint consortium among the Aboitiz Group, Insular Life, and the Social Security System. It started operations in 1981 and became a commercial bank on January 19, 1982. In July 1992, UnionBank was granted the license to operate as a universal bank.