The pandemic accelerated the shift to digital banking as people from all over the world stayed at and worked from home. The ripening of fintechs and digital-only banks has attracted the younger generations of bank customers, which is further accelerating the decrement of bank branches.
The Philippines, in particular, is experiencing a boom in digital banking because of the Covid-19 pandemic with incumbent digital-only banks and digitally transformed banks reaping early wins while legacy banks quickly upgraded their online offering.
In fact, the Bangko Sentral ng Pilipinas (BSP) showed that the combined volume and value of PESONet and InstaPay fund transfers reached P40 million and P527.5 billion, respectively, as of end-April this year, according to a recent report by The Manila Times. “Volume improved by 276 percent and value by 127 percent compared to figures recorded in April 2020.”
PESONet and InstaPay are two automated clearing houses under the National Retail Payment System.
Moreover, the BSP recently gave the green light to the fourth pure digital bank player in the country, which will further spur the adoption of digital banking among consumers.
“Digital transactions in the country continue to rise amid Bangko Sentral ng Pilipinas efforts to encourage the public to use electronic payment facilities to carry out financial transactions safely amid the health crisis,” said the BSP.
These are all aligned to the BSP’s three-year digital payments transformation roadmap, which was recently launched. This aims to have 50 percent of retail payment transactions to shift to digital and 70 percent of adult Filipinos to have formal accounts by 2023.
All these make the financial services sector in the Philippines as one of the most innovation-driven in the Asia-Pacific region.
This is recognized by the Asian Cloud Computing Association, which recently released a report on the readiness and maturity of cloud computing innovation and adoption in terms of the regulatory environment and support. The Philippines was ranked third place, behind Singapore and Japan, which ranked first and second, respectively.
Evidently, the country’s financial services sector is leading the migration to cloud technologies. In fact, the banking sector has seen an acceleration in digital banking initiatives as part of its digital transformation strategy.
It is opportune time that Alibaba Cloud will be launching its first data center in the Philippines by the end of this year as part of an aggressive $1-billion plan to expand its presence in the Asia-Pacific. The new data center will extend the reach of its services, including elastic compute, databases, security, machine learning and data analytics, to more local businesses across different sectors including financial technology and the public sector.
With a data center in the Philippines, financial services institutions can now advance their cloud migrations and enjoy lower latency at a lower cost through Alibaba Cloud’s high performance cloud services while keeping their data within the country.
The author is the chief executive officer of Hungry Workhorse Consulting, a digital and culture transformation consulting firm. He is the chairman of the Information and Communications Technology Committee of the Financial Executives Institute of the Philippines (FINEX). He is a fellow at the US-based Institute for Digital Transformation. He teaches strategic management in the MBA program of De La Salle University. The author may be emailed at rey.lugtu@hungryworkhorse.com.