Financial technology (FinTech) has the potential to bring millions of people into the formal financial system. In Mindanao, Cantilan Bank has become the first Philippines financial institution to move its core banking system into the cloud, providing its clients with improved access to a wider range of financial services.
Introduced through a collaboration involving the central bank of the Philippines and $150,000 in technical assistance from Asian Development Bank (ADB), Cantilan Bank is currently piloting a tablet-based mobile banking application as part of a four-stage project. The app enables customers to apply for a loan and make repayments to visiting branch officers, without the need to visit a bank branch.
Going forward the bank will next integrate its automated teller machines and interbank transfer systems into the cloud, with a full mobile banking application the end result.
Charles Hotchkiss, president of Cantilan Bank said the move to cloud-based architecture enables the bank to “offer a lot more services to clients, such as electronic funds transfer (EFT). People have relatives working outside and perhaps by getting the money directly to them in real-time, they can manage their finances better.”
The initial capabilities are proving popular with the banks clients trialling the new app. “Because the gadget is good and high tech we easily get our money”, said Margilyn Cosmiano, a farmer and fish stall owner, adding the app had enabled her to “set up the businesses that I had planned, and I have been able to send my children to school.”
Instant confirmation a hit
John Gallega, a Cantilan Bank account officer, said one of the features that the Cantilan Bank trial clients were finding most useful was the SMS (text messages) the system automatically sends.
“After the payment has been entered in the system the bank’s clients automatically get a text message that their payment has been received. The same occurs with deposits to their savings accounts. The text message enable the account holder to feel comfortable that their payment has already been registered”, he added.
|Tanya Hotchkiss: Moving to the cloud has enabled us to have real-time monitoring, reports that missing in our old system, giving us the ability to create more products for our clients. Video ADB|
Shifting all its operations into the cloud has also made Cantilan Bank’s operations more efficient, more cost-effective, and more resilient to power outages, fire, or geophysical risks: the region recently suffered a 5.5 magnitude earthquake, a not uncommon occurrence in the Philippines.
Because bank officers can monitor in real-time all branch operations, bank liquidity, compliance, and operational risks are also reduced. Sheryl Asio, head of the Funds Management Division at Cantilan Bank said being in the cloud enabled her to “mitigate the liquidity risks of the bank. I can make immediate decisions in real-time. This provides more time to focus on customer needs”.
According to Lisette Cipriano, an ADB senior digital technology specialist, “the Philippine market is ripe for digitalisation. We have high mobile phone penetration and high use of social media”, he said, adding “with mobile technology the reach is tremendous and it is the beginning of the journey to economic empowerment.”
Money kept at home
According to the ADB about 70 per cent of people in Mindanao keep their savings at home rather than in the bank, a figure it says that that is on par with the rest of the country. This leaves millions of people with nowhere safe to keep their savings and having to tap family or potentially costly informal lenders if they want to borrow.
The situation is similar in many countries in Asia and the Pacific. According to the ADB, in Lao PDR only 29.1 of people have a bank account, while in Myanmar just 26.0 per cent do. In Cambodia The World Bank puts the figure at just 3.7 per cent, with a mere one per cent of those accounts being actively used.
In hand with the move to cloud-base architecture Cantilan Bank has been working to educate its 166,000 customers on the need for online security, with account officers such as Mr Gallega at the forefront of demonstrating good online practices. Clients need to be assured that the technology is as secure, if not more secure, than the papers and files they keep at home or are in the bank, he said.
With nine out of 10 households in Asia and the Pacific lacking access to financial services, it is hoped that the experience gained by Cantilan Bank can be replicated with other banks domestically, as well as abroad.
Feature video ADB
- Cantilan Bank brings financial inclusion to rural Philippines through cloud (Channel Asia)
- Cantilan Bank is first BSP regulated Rural Bank to pioneer cloud-based technology (ManilaStandard)
Testing Fintech Bank Solutions in the Philippines (ADB)
- Financial Technology Expands Reach of Banking Services in the Philippines (ADB)
He has spent extensive periods of time working in Africa and throughout Southeast Asia.
He has covered major world events including the 1991 pillage riots in Zaire, the 1994 Rwanda genocide, the 1999 East Timor independence unrest, the 2004 Asian tsunami, and the 2009, 2010 and 2014 Bangkok political protests.
In 1995 he was a Walkley Award finalist, the highest awards in Australian journalism, for his coverage of the 1995 Zaire (now Democratic Republic of Congo) Ebola outbreak.
Prior to AEC News Today he was the deputy editor and Thailand and Greater Mekong Sub-region editor for The Establishment Post, predecessor of Asean Today.