Financial services

Digitization of Financial Services: Accelerating Financial Inclusion

In the age of digital transformation, consumers and even businesses now demand anytime, anywhere service. This is especially true for banks and financial institutions, which provide services to the general public and play an important role in people’s daily lives.

The pandemic has forced the acceleration of digital adoption in finance, a reality that has proven to be a double-edged sword – which, while showing that banks are following the demands of the times, has also amplified the huge gap between those who are included in the financial systems and those who are not.

In the Philippines, five out of 10 Filipino adults are still considered unbanked, meaning nearly 36 million Filipinos lack formal access to financial tools and services such as savings, loans, credit and insurance.

However, green shoots of recovery have sprung up – while the majority of the adult population is still considered unbanked, 53% of the same population now have transaction accounts. This is a phenomenon that experts say has arisen out of the need for digital solutions due to the many lockdowns over the past couple of years.

Due to mobility restrictions, Filipinos have been 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 forced to adapt to this new trajectory, improving the user experience through the integration of digital financial tools.

“Leveraging the cloud for the digital transformation of finance”

To meet this demand, financial institutions, both banking and non-banking, must take advantage of new technologies. Cloud-based solutions are meant to make it faster and even easier for institutions that want to bolster their core banking services with digital solutions.

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

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

Fintech enables banks and financial institutions to digitally transform their operations to improve user experiences, promote the creation of innovative products, reach more customers, expand their service offerings, improve efficiency, streamline operations, reduce costs and manage risks.

“Essentially, we provide very flexible solutions that allow them to serve their customers in meaningful ways – mobile solutions, electronic channels, and more,” Tan said.

Since it is cloud-based, it removes the large overhead investments typically required in the banking industry, allowing more Filipinos to access finance. For its groundbreaking contributions to the industry, the company has won 23 technology awards in international competitions, including Best Blockchain or Technology/DLT Platform at the 2019 Asian Banker Business Achievement Awards, among others.

“What’s different from what we do from our traditional peers is that these aren’t hardware-based – it’s all on a cloud-based system,” Tan explained.

As a key enabler of digital finance, OneConnect strives to create a digital ecosystem using four of the leading innovative technologies to help financial institutions digitize their operations, namely: artificial intelligence, blockchain, cloud technologies and big data analytics.

By 2019, OneConnect had already served more than 3,700 customers, including 600 banks, including all major Chinese banks and 99% of its city commercial banks, as well as 46% of its insurance companies. In the ASEAN region, OneConnect has laid its foundations in 14 countries with 47 customers.

Even before the COVID-19 digital wave hit, OneConnect had already engaged potential Philippine bank customers as early as 2018. In time for the remote banking demands caused by the pandemic shutdowns, it was completed in 2020, ready to serve the Philippines. market.

Using its technology, its partners have been able to process billions of pesos in personal and business loans, integrate their services into various platforms, and bolster their core banking solutions. In the Philippines, OneConnect serves customers such as open finance leader UBX and SB Finance, which provide large-scale digital banking services to Filipinos across the country.

Using OneConnect, UBX was able to develop SeekCap, an online multi-lender financing marketplace designed for small and medium-sized businesses. In 2021 alone, SeekCap processed over 5 billion pesos in loans from over 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 auto loans, democratizing access to loans for ordinary consumers.

Strong push for financial inclusion

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

The promotion of digital finance among Filipinos has been made easier for OneConnect since the Bangko Sentral ng Pilipinas (BSP) created an enabling regulatory environment for the promotion of digital finance.

Over the past few years, BSP has 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 access 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% and migrating 50% of all retail transactions to digital channels.

“As normalcy gradually returns to the country, OneConnect is committed to continuing to support the BSP in achieving its financial inclusion goals with our technology-as-a-service platform and solutions,” said NGO.

The platform is considering more developers and business analysts as part of its Filipino team, who will be selected from a group of people who are able to work. Despite the relaxation of health protocols and the increase in mobility, e-commerce is already part of everyday life and is here to stay. ATM withdrawals pale in comparison to the number of Instapay and Pesonet transactions, marking a milestone for a country where finance has always been traditional.

“Philippines is definitely one of the countries that have promoted digital banking. There is a lot of demand, opportunities and also requirements that align with our strategic direction, and therefore, it is one of the key markets we need to focus on by building a reliable local team We are working to have more technical engineers, architects, developers and business analysts in the field so they can better support the market Filipino,” Ong explained.

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

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