BSP urges thrift banks in liberalized banking industry
The central bank urged thrift banks to carefully study the evolving environment of the banking industry amid the reforms and take a strategic approach to find their own niche in the “new normal.”
Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. told thrift banks they must adopt best practice standards, adapt to the changing market conditions and adjust their strategies to find their own niche in a liberalized banking industry.
“You need to be strategic in facing the new normal. Banks have to look carefully at the evolving environment including the reforms and how they can strategically position themselves in a changing market environment,” Tetangco said in a keynote speech at the Chamber of Thrift Banks (CTB) 2015 Convention held in Makati City on Tuesday.
Tetangco said the banks may take positions in growing sectors such as the micro, small and medium enterprises (MSMEs) and become catalysts of economic growth.
To date, the MSME sector accounts for 99.6 percent of the total number of enterprises in the country and share more than one-third or 35 percent of gross domestic product (GDP), the BSP governor said.
The sector employs 65 percent of the country’s current workforce, he said.
“This sector will have significant multiplier effects in generating employment and raising the standard of living… by positioning to serve this sector, thrift banks can be true catalysts of broad-based and sustainable inclusive growth,” he added.
In response, the Chamber said Philippine thrift banks are now gearing up to meet the challenges posed not only by a unified Southeast Asian market upon full implementation of the integration of the Asean Economic Community, but the demands of a buoyant economy.
CTB President Rommel Latinazo, who is also president of RCBC Savings Bank, said that despite the threat of a liberalized environment, thrift banks remain competitive and have an advantage.
“With the Asean integration a lot of new players are expected to come in but we believe thrift banks are at an advantage because we are already on the ground with established presence especially in the countryside, with customers in place,” he said.
Latinazo said that CTB member banks will build on that advantage and protect their market share, underscoring the growing needs of their customers in the countryside, particularly MSMEs.
George Martirez, CTB second vice president, convention chair and Malayan Savings Bank president, said the impending Asean integration will entail the need for thrift banks to invest in technology and new processes to help them deliver services more efficiently.
Martirez said thrift banks operate in the non-urban areas, which gives them a better and closer view of the daily businesses operating locally that can help them identify their potential niche market more easily.
“Hence, we can now come up with financial products and, more importantly, the services we can offer to clients in the area. So, there will still be opportunity for the smaller player, so to speak, in the light of the Asean integration that will be forthcoming,” he added.