The banking and finance industry is going through a drastic digital shift currently and Frederic Ho as the vice president of Asia Pacific at Jumio Corporation is at the centre of this paradigm shift.
Presently, he leads clients such as HSBC, Singtel and CIMB Bank Philippines in streamlining the identity verification processes for online customer onboarding and compliance with KYC obligations. A huge proponent of technology as an enabler, Ho has seen a phenomenal acceptance to digital finance in Philippines over the last few years which has picked up steam during the pandemic induced lockdown.
In this conversation with the AsiaBizToday, he shares his views on the growth of fintech and opportunity to get large masses of population into the financial mainstream.
Reaching the Unbanked
Digital banking is well-positioned to play a key role in serving the needs of the unbanked population. “One of the biggest hindrances to reaching unbanked communities is the inaccessibility of physical bank branches. In countries like the Philippines, for instance, many locals cannot make the trip to a branch to open an account or deal with onboarding requirements,” he shares. This problem, he adds, is exacerbated today — with lockdowns and movement restrictions unfolding across the country.
Digital banking services address this challenge by eliminating the friction points consumers face in opening and maintaining a bank account, explains Ho. He points out that it enables anyone with an internet connection to transact with the bank and offers simpler onboarding requirements via mobile apps for enrolment and verification.
He mentions that the Philippines government has also initiated support programmes and measures to help ensure that the growth potential of digital banking is fully realised. “These include policies that help boost the accessibility and convenience of e-payments, such as the National Retail Payment System, PesoNet and InstaPay, as well as partnering with banks to roll out digital banking licenses,” he informs. Traditional banks, too, can leverage fintech services to drive financial inclusion, elevate their portfolio, and future-proof their business, he adds.
Adopting Digital Banking
Ho thinks that both public and private sectors can encourage the adoption of digital banking through continued innovation, collaboration, and education. These opportunities, he says, will ensure that the Philippines can grow in a way that benefits the whole society — including those who are struggling to receive basic banking services.
In fact, he feels that the unbanked sector is poised to benefit the most from digital banking services. He is also appreciative of the sport provided by the government on this front by encouraging innovation through a ‘test-and-learn’ sandbox philosophy, which centres on active multi-stakeholder collaboration, risk-based proportionate regulation, and consumer protection.
“Additionally, the Philippines’ central bank (BSP) has made commendable efforts in implementing a Digital Literacy Program,” he states. He further says that as part of its financial education advocacy, the program aims to increase public trust and confidence in the digital finance ecosystem and encourage the use of digital financial services by consumers.
Building the Infrastructure
While the key enabler of digital banking is internet accessibility, Ho points out that the ability to deliver fast and reliable internet access in the country which is essentially a sprawling archipelago of over 7,000 islands continues to be a massive undertaking.
However, he is optimistic about the progress being made in this area with the average broadband connection speeds having almost doubled from 2018 to 2021. The entry of a third major telco player in March 2021 is also set to further improve the speed and reliability of connections in the country over the next few years, he believes. “All this infrastructure will undoubtedly boost the adoption of digital services, including banking, even among previously hard-to-reach segments of the population,” he asserts.
Effects of Pandemic
The COVID-19 pandemic has forced many people to relook the way they live their lives and acquire the everyday resources that they need, shares Ho. This, he says, has inadvertently made digital services more important than ever before.
Key operations such as remittances, money transfers, food and grocery purchases, and many other basic services must accommodate the scenarios where the physical presence of the consumers is not feasible, he contends. “This is especially pronounced with the uncertainty of the COVID-19’s restrictions. As a result, going digital is increasingly becoming an imperative to survive,” he says.
No wonder then that more Filipinos are also turning to digital banking lately. Ho informs that several banks have recorded a sharp increase in new digital sign-ups and transactions on their platforms during the country’s enhanced community quarantine.
The exponential increase in digital banking activity brought a newfound sense of urgency for businesses to look for solutions that can ease the process of onboarding and transacting online, while ensuring security. This is where Jumio comes in. It is working towards easing this transition through provision of critical services to individuals, so that they may sign up for services digitally, in a fast and secure manner.
Social and Economic Impact
“One of the main benefits of digital banking is in driving financial inclusion,” Ho stresses. He feels that lack of access to financial services can have a detrimental effect on individuals — having limited ways to receive and make payments, save and accumulate savings, or manage cash flow.
Beyond just bringing financial institutions online, digital banks fill a gap in the market by making banking simple, secure, and hassle-free for customers, he shares. With the reduced structural costs of keeping things online, he adds, most providers will also be able to offer lower fees for financial transactions and minimise the deposit amounts required.
As more consumers gain access to financial services, another key benefit is financial literacy, he points out, as it enables more citizens to manage spending plans and reduce debt more efficiently.