Financial firms reach new markets for embracing digitization

Compared to the brick-and-mortar way of banking in the past, a rural bank and a financing firm have thanked their embrace of digitization for the increase in the number of their clients being served in the country over the years, done through onboarding a financial technology enabler into their systems.

During the Oradian Customer Summit at the Fairmont Hotel in Makati City, Ana Alingog-Lazzari, president and CEO of a local finance company Country Funders Finance Corporation, said leveraging technology has made a tremendous leap in the numbers of their clients during their five-year operation.

"We started with 5,000 customers, and now we already have 300,000. Indeed, there is the need for continuous collaboration and help from technology experts, which made our company grow," Lazzari said.

Country Funders is a local finance company established with the goal of extending financial assistance to the unbanked and underserved sectors of the country.

Headquartered in Cauayan City, Isabela, the company is part of the Ropali Group of Companies, a mid-sized Philippine conglomerate with a presence in the motorcycle retail, agricultural machinery, and banking industries.

For his part, Ron Recto of the Rural Bank of San Antonio said for the last 10 years of its existence sans digitalization, the yearly growth of the company was just three to six percent.

'But for last year alone, our growth posted from 12 to 14 percent or growing three times from the previous," Recto disclosed.

Country Funders and Rural Bank of San Antonio are two of the valued clients of Oradian, the first cloud-native core banking system to be used by BSP-regulated financial institutions in the Philippines with a mission to partner with high-growth, tech-enabled financial institutions to drive growth and promote financial inclusion for last-mile communities.

Other notable financial institutions on board Oradian technology services include financing application Salmon; Agribusiness Rural Bank of the Philippines; community bank Cantilan Bank; non-collateral loan provider Esquire Financing Inc., and Nigeria-based micro-finance bank Fairmoney.

Financial services continue to evolve

Meanwhile, Oradian chief operating officer Julian Oehrlein maintained that financial services in the country will continue to evolve as digital natives are now aware of the benefits of being financially inclusive.

"We have seen the tradition of delivering financial inclusion in the past, such as rural banks, micro-finance, and cooperatives. But obviously, there are more digital natives that are growing, requiring financial services to have jobs, who want to buy homes, have families, and start businesses. I think we really see digitalization going through a complete market, literally to everyone," Oehrlein told the DAILY TRIBUNE.

He said embracing digitization in financial institutions indeed provides efficiency gains rather than losses, although financial firms still need a lot of homework to be done for institutions to grow further.

"I think with this outline of how differentiation from traditional banking to digitization looks like, there is a ton of homework that needs to be done, not just by small financial institutions but also by the big commercial banks. Everyone would really need to rethink how their business works and what makes them unique and how they can offer specific products that are better and cheaper than what the competition is offering," he said.

Coming out from the global contagion and moving forward, Oehrlein stressed that the time will come when cash and even cards will not be needed anymore in every transaction because every purchase will be paid via a QR code.

"Cash and cheques will also be going away as physical forms of payments, obviously in the rise of mobile connectivity even in the remotest areas. I think these are the rails on which the new financial ecosystem will be built," Oehrlein emphasized.

Last July 2023, Bangko Sentral ng Pilipinas Governor Eli Remolona Jr. said they are confident that the number of financially included Filipinos will reach the 70 percent mark by the end of 2023.

Based on the financial inclusion survey in 2021 done by the BSP, 56 percent of adults in the country had a bank account, a significant increase from just 23 percent in 2017.

Aside from the increase in the number of Filipinos with bank accounts, he said the number of retail payments in digital form also went up.

"We're making some progress. At last count, 42 percent of retail payments were in digital form. This is up from just 1 percent ten years ago. That proportion should hit our target of 50 percent this year," Remolona said.

He noted that the BSP has so far issued licenses to 258 digital payment providers.