Banker Says Trust Is Key for Cash-Based Philippines to Go Digital

(Bloomberg) -- Lenders are key to convincing largely cash-based customers in the Philippines to go digital, Union Bank of the Philippines Chairman Justo Ortiz said.

“There’s a trust issue. And I think that’s where banks can play a role,” Ortiz told Bloomberg Television’s Haslinda Amin at the Bloomberg Asean Business Summit in Bangkok. “We are a trusted curator for the customers. Once the banks get into the play, I think that would create the environment for a more trusted ecosystem.”

While the Philippines is home to among the world’s heaviest internet users, about 65% of transactions still involve cash. The key is to convince three fourths of 106 million Filipinos wary of digital transactions, Ortiz, 61, said, citing central bank data.

Banking will eventually become “invisible,” Ortiz said. This is why Union Bank, the Philippines’ 9th largest by assets, has created UBX to work with and invest in start ups. The lender has invested in a logistics supply chain platform, Ortiz said. The bank’s share price rose 1.7% at the noon trading break in Manila.

“We have a strategy around the fintech,” he said. “The plan is to bank them.”

In a March note, Bloomberg Intelligence bank analysts Diksha Gera and Hui Yen Tay write internet connectivity is a big logjam for proliferation of digital payments in the Philippines while turning to tech will give lenders a competitive edge.

--With assistance from Haslinda Amin, Anand Menon and Adrian Wong.

To contact the reporter on this story: Siegfrid Alegado in Manila at aalegado1@bloomberg.net

To contact the editors responsible for this story: Cecilia Yap at cyap19@bloomberg.net, Clarissa Batino

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