Phygital: BPI’s inevitable shift

The Bank of the Philippine Islands (BPI) intertwined goals in redesigning its products and services are serving the financial needs of the country’s growing middle-income class, help the nation mitigate climate change and accelerate digital adoption.

BPI head of consumer banking Ginbee Go ensures these goals are achieved by transforming traditional bank branches into phygital branches where clients can explore flexible loans for greener homes, electric cars or hybrid vehicles.

Phygital branches allow clients to quickly accomplish basic transactions through digital tools inside the branches and discuss their wealth-building or investment goals with the bank’s skilled advisors within intimate and semi-intimate spaces.

“This is because digital clients still turn to the branch for expert advice from our branch personnel to learn how they can manage their finances better and how they can achieve their dreams,” Go said.

Despite the increased popularity of digital banks, she said phygital bank units help the 173-year-old BPI strengthen trust with clients while providing them benefits from digitalization amid the rapid technological advancements in the banking industry.

Mark of commitment

“Being able to talk to someone and visit a branch is an assurance of the legitimacy and commitment of a bank, especially on matters as important as one’s hard-earned money,” Go said.

“Before we make recommendations, we ask clients what their goals are because there’s no one-size-fits-all. We offer beyond your usual savings account because if your money is just there, it will not be enough to cover for inflation,” she stressed.

Launched in 2023, BPI currently operates 59 phygital branches and plans to add 70 more units this year.

Recently, the bank opened its first Prime Phygital branch in Azuela Cove in Lanang, Davao City. This type of phygital branch features exclusive lounges and a dedicated concierge for higher-income clients.

“Meeting pods will be for conversations that require sensitive or personalized information. And meeting rooms will have video meetings with a product specialist who is in the head office or elsewhere and can just be hooked up for the video meeting for advice,” Go explained.

Go said BPI has been processing over 50 percent of client transactions through digital channels, reflecting the bank’s commitment to innovation.

Guided by the BPI team’s growth mindset, the bank secured the highest scores in customer satisfaction and trust in the past two years compared to its competitors.

This gives BPI confidence that more Filipinos will be visiting the phygital branches as they continue to build wealth.

Bigger client base, EV loans

The Department of Finance predicted that the country will become the 13th largest consumer market in the world within this decade, thanks to its expanding workforce.

According to the Philippine Statistics Authority, the number of employed Filipinos increased to 49.15 million in February from 48.95 million in the same month last year.

More than 1 million of them now earn higher incomes from middle — to high-skilled jobs.

Recently, BPI attracted 5 million more customers, resulting in a double-digit growth in gross customer loans at 13 percent to P2.3 trillion in the first quarter of the year.

Meanwhile, total deposits grew by 6.3 percent to P2.6 trillion. Due to higher interest-based income than depositor liabilities, BPI improved its net interest margin by 30 basis points.

“They are rich sources of our growth. Big data and analytics is key to our growth as we’ve been able to provide lending programs that are more targeted,” Go said.

According to the Department of Trade and Industry, more Filipinos have become interested in driving electric vehicles (EVs) as registration for these cars surged by 45 percent last year.

Based on BPI’s data, go echoed the positive data on sales in EVs and hybrid cars in the country.

“Out of our auto loans, EV and hybrid loans now account for 7 percent of our portfolio, coming from just 0.5 percent,” she said.

Go said this means a total of P108 billion EV and hybrid loans in the year’s first quarter.

Studies show EVs reduce harmful carbon dioxide emissions by at least 25 percent. In contrast, a traditional vehicle powered by gasoline or diesel produces 4.6 metric tons of such emissions each year.

To encourage the public to shift to EVs, BPI head of retail banking Dennis Fronda said BPI extended the maximum payment term for EV loans from five years to seven years under the MyKotse Program.

“EV adoption among Filipinos could grow as more automobile firms are entering the Philippine market, such as those from China and Vietnam,” Go said.

Greener homes, branches

To further mitigate climate change, BPI also offers MyBahay Program to lend funds to buyers of houses made from sustainable construction materials and equipped with solar panels.

For greener homes, BPI also stretches the usual maximum repayment for home loans from 20 years to 30 years.

Setting a good example, Go said BPI has also transformed its 17 phygital branches into more environment-friendly spaces.

The branches have been certified as EDGE Green Bank Branches by the International Finance Corp.

“EDGE or Excellence in Design for Greater Efficiencies certification recognizes buildings that achieve at least 20 percent savings in energy, water, and embodied energy-efficient materials,” BPI said in a recent statement.

Digital enhancements

Data from the Bangko Sentral ng Pilipinas reveal digital fund transfers from person-to-person have increased to over 14 percent of all digital transactions in the country since 2013.

Go said BPI Mobile app users already increased to 70 percent of all clients in 2023.

“In BPI, 90 percent of bank transactions are conducted digitally and only 10 percent are done in the bank branches. By 2026, at least 30 percent of Filipinos will be digital natives,” she said.

BPI clients can also use Vybe, the bank’s e-wallet, to receive rewards for shopping, dining, and travel.

Moving forward, BPI and the Central Bank are studying ways to open finance to reach more clients for various products, especially loans to help them achieve their dreams, such as owning a car or a home.

Open finance allows banks to exchange data digitally and faster at cheaper costs to businesses and consumers.

“We’re still working with other stakeholders for open finance to ensure cybersecurity, interoperability of banks, faster transactions, and the needs of clients will really be met,” Go said.

“Part of this is making our artificial intelligence smarter, so we still need people to get, organize and analyze data so the computer can learn and learn and learn,” she added.