Digital partnerships are essential to help banks and insurance companies remain competitive in the digital age, said a study published recently by The Economist Intelligence Unit.
The report, “Disrupting banks: Digital partnerships in the financial services industry”, highlighted global trends for digital partnerships between organizations in the financial and technology sectors.
The report also cited the emergence of the “always on” digital and mobile consumer as the main force behind these digital partnerships. Consumers are increasingly connected through mobile phones and other gadgets and they are now expecting the same level of customer experience with digital services offered by technology companies.
Global survey on financial services and digital partnerships
Based on the global survey conducted among 1,045 senior business leaders representing a total of 20 industries (with 156 respondents coming from financial services), “digital partnerships split financial services firms down the middle.”
Among the findings of The Economist Intelligence Unit were:
- Fifty percent of executives believe that their partnerships have already proven their value “beyond doubt”.
- Forty nine percent expect their digital partnership to result in a business model change for their companies.
- Fifty six percent believe most companies will have to be part of a network to leverage technology trends.
Philippines ahead of the curve
“In this respect, we believe our partners here in the Philippines and the region are among those ahead of the curve. Early on, we’ve established good partnerships that have resulted in customer traction for our products and platforms,” said Lito Villanueva, Vice President and Head of Financial Innovations, Digital Inclusion and Alliances at Voyager Innovations, who was interviewed as expert resource by The Economist.
Among the prominent examples of digital partnerships globally that were cited in the report of The Economist was the LANDBANK Mobile Loan Saver, a product of the collaboration between Land Bank of the Philippines and Voyager Innovations, together with digital financial services leader Smart eMoney. Both Voyager Innovations and Smart eMoney are digital innovation units of PLDT and Smart Communications, Inc. (Smart).
LANDBANK Mobile LoanSaver is the country’s first paperless and electronic salary loan program with auto savings and insurance features. In less than a year, the globally recognized service has processed over P4 billion in salary loans for more than 30,000 employees from about 580 government agencies.
More digital innovations in fintech
The success of the LANDBANK Mobile Loan Saver has given birth to another innovation – Lendr, the first online consumer loans marketplace. Launched recently by Voyager Innovations, Lendr aims to provide financial institutions with a ready platform to efficiently reach out to their target customers and at the same time, provide consumers with the convenience of searching and applying for loans online with just one Lendr account.
As an initial breakthrough, Voyager Innovations signed a partnership with the Rural Bank Association of the Philippines and its individual member rural banks to further drive financial access in the countryside through Lendr.
“Leveraging on mobile technology is a great equalizer where small banks could compete with even large industry players; it simply levels the playing field,” said Manuel V. Pangilinan, Chairman of PLDT, Smart and Voyager Innovations.
Initial traction for Lendr has been positive. Aside from the partnership with RBAP, more than 50 individual rural banks already signed up to be part of Lendr.
The company also signed a deal with Bulgarian based fintech startup Cash Credit for consumer loans credit scoring. Most recently, Voyager Innovations and Smart entered into a strategic partnership agreement with the CIMB Group, the Malaysian-based universal bank that has presence across Southeast Asia.
Challenges are opportunities
Villanueva also said that as promising as these digital partnerships for mobile banking products are, the industry still has issues to contend with. “Banks, as the incumbent players in financial technology, are not necessarily the most open-minded when it comes to working with tech companies. They may be used to their own processes and not see the cost-effectiveness of partnering with tech players.”
“That said, I have full confidence that more and more banks in the Philippines will look toward digital partnerships as a means of better serving customers. Our partners are proof of this,” he concluded.
Both Voyager Innovations and Smart eMoney are pioneers and leaders the digital financial technology space. Among the areas they are focusing are digital payments, mobile consumer loans, government to person disbursements, remittance and digital financial services security.
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