Digitalizing financial services: Accelerating financial inclusion

In the age of digital transformation, consumers and even businesses now demand service anytime, anywhere. This is especially true for banks and financial institutions, which provide services to the public at large and play a big role in people’s day-to-day lives.

The pandemic forced the acceleration of digital adoption in finance, a reality that has proven to be a double-edged sword – that while it showed that banks are keeping up with the demands of the times, it also magnified the huge gap between those that are included in the financial systems and those that are not.

In the Philippines, five out of 10 Filipino adults are still considered unbanked, which means that almost 36 million Filipinos have no formal access to financial tools and services such as savings, loans, credit, and insurance.

However, green shoots of recovery have sprouted – that while the majority of the adult population is still considered unbanked, 53 percent of the same population now have transaction accounts. This is a phenomenon that experts believe has sprung out of the need for digital solutions due to the numerous lockdowns over the last two years.

Due to mobility restrictions, Filipinos were forced to digitally conduct their basic financial transactions online, from paying bills to managing their money. As this becomes the trend in the world of finance, organizations are also obligated to adapt to this new trajectory, by improving user experience through the integration of digital finance tools.

‘Leverage cloud for digital transformation in finance’

To meet this demand, financial institutions – both banks and non-banks – have to leverage new technologies. Cloud-based solutions are seen to accelerate and even provide ease to institutions that want to strengthen their core banking services with digital solutions.

“Banks and other financial institutions must leverage the cloud in order to hasten their digital transformation. Cloud-based solutions allow them to expand at scale, at lower costs, and quickly adapt to the new normal in finance,” OneConnect Philippines Country Manager Samuel Tan said.

OneConnect is a globally-recognized technology-as-a-service platform for financial institutions, providing cloud-based technology solutions that integrate extensive financial services industry expertise with market-leading technology.

The fintech company enables banks and financial institutions to digitally transform their operations to enhance user experiences, promote innovative product creation, reach more clients, expand their service offerings, improve efficiency, streamline operations, reduce costs and manage risks.

“Essentially, we provide very flexible solutions that enable them to serve their clients in meaningful ways – mobile solutions, electronically-based channels, and more,” Tan said.

Since it is cloud-based, it does away with the large overhead investments that are usually needed in banking, giving more Filipinos access to finance. For its groundbreaking contributions to the industry, the company won 23 technology awards in international competitions, including the Best Blockchain or DLT Technology/Platform Award at The Asian Banker Business Achievement Awards 2019, among others.

“What is different from what we do from our traditional peers is that these are not based on the hardware — everything is on a cloud-based system,” Tan explained.

As a key enabler for digital finance, OneConnect strives to build a digital ecosystem by using four of the leading innovative technologies to help financial institutions digitalize their operations, namely: Artificial Intelligence, Blockchain, Cloud Technologies, and Big Data Analytics.

In 2019, OneConnect had already served over 3,700 customers, including 600 banks which included all of China’s major banks and 99 percent of its city commercial banks, plus 46 percent of its insurance companies. In the ASEAN region, OneConnect laid its foundation in 14 countries with 47 clients.

Even before the COVID-19 digital wave struck, OneConnect had already been engaging potential Philippine banking clients as far back as 2018. In time for the demands of remote banking brought by the pandemic lockdowns, it was completed in 2020, ready to serve the Philippine market.

Thanks to its technology, its partners were able to process billions of pesos in loans both for consumers and businesses, embed their services in various platforms, and strengthen their core banking solutions. In the Philippines, OneConnect serves clients such as open finance leader UBX and SB Finance, which provide large-scale digital banking services to Filipinos nationwide.

Through OneConnect, UBX was able to develop SeekCap, an online multi-lenders financing marketplace designed for small and medium enterprises. In 2021 alone, SeekCap processed over P5 billion in loans from more than 25,000 customers

SB Finance, on the other hand, leveraged OneConnect’s technology and expertise to introduce zukì, a mobile app that offers personal and vehicle loans, democratizing access to lending for ordinary consumers.

Strong push for financial inclusion

According to Annie Ong, Chief Revenue Officer of the International Business Unit at OneConnect, the Philippines has a supportive regulatory environment for digital transformation in finance.

Promoting digital finance among Filipinos has been made easy for OneConnect since the Bangko Sentral ng Pilipinas (BSP) has created a supportive regulatory environment to promote digital finance.

In the past years, BSP issued several circulars to enable banks to develop digital solutions to reach the unbanked, expand their services to serve the underbanked, and help growing businesses gain access to digital financing solutions that were previously beyond their reach. The BSP aims to promote financial inclusion by increasing the number of Filipino adults with bank accounts to 70 percent and migrating 50 percent of all retail transactions to digital channels.

“With the gradual return to normalcy in the country, OneConnect is committed to continue supporting the BSP in achieving its financial inclusion goals with our technology-as-a-service platform and solutions,” Ong said.

The platform is eyeing more developers and business analysts as part of its Philippine team, which will be selected from a pool of individuals who are fit for the job. Despite the easing of health protocols and the increase in mobility, e-commerce is already a part of everyday life and is here to stay. ATM withdrawals pale in comparison to next to the number of Instapay and Pesonet transactions, marking an important milestone for a country where finance has always been traditional.

“The Philippines is definitely one of the countries that have been promoting digital banking. There is a lot of demand, opportunities, and also requirements that fit our strategic focus, and therefore, it is one of the key markets for us to focus on by building a reliable local team. We are striving to have more technical engineers, architects, developers, and business analysts on the ground so that they can provide better support to the Philippine market,” explained Ong.

For the banking industry in the Philippines, all roads lead to a brighter future thanks to fintech solution providers like OneConnect.

“There is high demand for digital banking services among consumers and businesses and we don’t see it waning anytime soon. We are excited for what’s ahead of us this year and we certainly would like to be part of the Philippines’ growth journey,” Ong added.

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