• What they think


    How do Philippine banks survive the tide of regional integration, cyber attacks, and money laundering? Does size matter?

    The Manila Times’ 4th Business Forum succeeded in threshing out ideas and solutions from industry stakeholders, themselves.

    Luis Pineda, President and Country General Manager, IBM Philippines
    “Capitalization is essential in maintaining and expanding banking operations. But in the advent of digital disruption, size may no longer be a key asset. In today’s world, apps and fintech startups could fold businesses and skew industries…. Cybercrime is an insidious threat that has reached crisis levels. No geography or industry is immune…. Today’s criminals ‘hang out’ in the ‘Dark Web….’ With every bank now a target, size may not matter. What matters is one’s vulnerabilities…. Surviving the tide of competition, cyber threats, and money laundering requires the exercise of a timeless Filipino virtue—Bayanihan. Ironically and fortunately, this age-old virtue of us—bayanihan—is applicable in today’s modern, digital world. It’s generally acknowledged that collaborative sharing of information is a powerful weapon to combat risks and threats…. External parties need to do more; the government needs stronger oversight and laws; industry collaboration must increase; and cross-border information sharing must be strengthened. All of us must act now.”

    George Chua, President, Financial Executives Institute of the Philippines
    “Amendments to the anti-money laundering act (AMLA) may help to reduce the incidence of cybercrime in the country’s financial system…. Banks are already overburdened with so many reportorial requirements at present that it creates a lot of noise in the system, which leads to difficulty in identifying ‘red flags….’ Because when you submit truckloads of documents, whether it is in digital or physical form, the people on the regulator side or the receiving end are also overly burdened by such reports, [and]I do not know how they plan to evaluate the information that they receive…. I hope under the new administration, people will become more pragmatic and less bureaucratic.”

    Jonathan Uy, Director, PWC Consulting
    “LETS Act (Learn by identifying your organization’s vulnerabilities to cybercrime and other technology risks; Evaluate your organization’s security and technology risks by assessing its vulnerabilities and potential impact; Train the people within your organization to detect and prevent cybercrime proactively; Systematically limit cyber crime by sharing information and working collaboratively.). Size doesn’t matter; it’s the heart that matters—the heart of the institution to succeed in the digital age, as measured by passion, commitment and investment made to fight cyber crime.”

    Thiam Hee Ng, Asian Development Bank Principal Economist
    “Banks are the most important financial institutions in ASEAN…. Integration of banking market will create a larger customer base and create opportunities to reduce cost, increase competition, achieve economies of scale, and improving efficiency. It can also improve stability by promoting the growth of regionally competitive banks. Improvements in financial infrastructure can also help increase resilience. Greater competition looms…. We see potential to benefit both sides…. Greater regional cooperation is needed to minimize the risks from integration…. Local banks should know the locals; they should have an idea what kinds of products appeal to the customers. Foreign banks, on the other hand, bring greater competition and better services to consumers…. Small is beautiful…. Local banks have an opportunity to tap into partnerships with foreign banks.”

    Angelina Reyes, Senior Vice President, Metropolitan Bank and Trust Co.
    “Partnership is the way to go…. It’s a situation when markets are wider and opportunities are wider for banks. We feel tiny in the face of our regional counterparts. But we have strength. It’s an opportunity for good partnerships for local banks with the regional banks, because we have the local footprint. I think we have to focus on our strength. We have to learn from our Asean neighbors on their capabilities and their culture… I think the central bank has been proactive. We’re looking at the next 20 years. The challenge is in the rural areas. Probably, we’ll see a lot of these foreign banks acquiring the locals.”

    Aftab Ahmed, CEO and Citi Country Officer, Citibank Philippines:
    “What does Asean integration mean to the Philippines or the ordinary person in terms of opportunity? There will be greater need for low- and middle-income housing, and that will benefit Philippine real estate. There will be greater need for infrastructure enhancement for the whole region. By 2020, capital market will grow five times from 2015 levels…. Asean is being increasingly favored by multinationals. The primary focus should be infrastructure development. The Philippines has strong macroeconomic scorecard, and has a very good story on human capital with strong remittances and business process outsourcing…. With continued good governance, strong economic fundamentals, continuing investment grade status, and a robust inflow of OFW/BPO dollars, the Philippines will benefit from the Asean Economic Community…. To fully achieve an integrated single market, Asean Economic Community will need to harmonize laws, regulations, and create integrated regional infrastructure.”

    Florencia Tarriela, Chairman, Philippine National Bank
    “We can survive the tide of competition if we can address key challenges like the anti-bureaucracy stance of (President-elect Rodrigo Duterte)…. Does size matter? Yes, of course. But it’s not the only thing that matters—it’s quality and competitiveness…. Bankers can already feel the competition. The competition is here. We don’t have to wait for 2020…. The Philippine boat may not be the biggest, but it was able to steer through challenges by having the foundation of a strong macro-economy…. Are we ready? If we don’t move fast enough, we’ll be out of the picture. We need to act with urgency, to grab the opportunities despite the challenges.”

    Nataliya Mylenko, Senior Financial Sector Specialist, World Bank
    “There appears to be a headroom if we compare Philippines with other Asean countries for the continued expansion of intermediation in the private sector…. Credit growth is strong, but not across all sectors because agriculture has negative growth…. I think there is a gap in the market and finding the right way to approach sectors and looking at the small businesses is a challenge for the Philippine banks.”

    Abelardo Cortez, Independent Director, First Metro Investment Corp.
    “Cyber attacks in Bangladesh and Vietnam should prompt all banks to come up with programs to fight cyber financial crimes…. After the Bangladesh cyber attack, hackers are still very active in the Philippines and globally…. The Philippine banking system is well–capitalized and with high liquidity. We are well positioned to meet all these requirements. (Public-Private Partnership) is expanding. Now foreign banks are coming to partner with local banks. WB sees 6.4-percent growth this year. The remittance business will have P26 billion; BPO, P26 billion. Fantastic! Parang tumama sa lotto.”

    Palmer Mallari, Head Agent, National Bureau of Investigation
    “The inventors of the internet hardly had any idea that the Internet could also be used in the commission of crimes because the intention was to make life easy for people. It turned out that the Internet facilitated the commission of crimes, faster, cheaper, with sophistication…. Wala nang barilan, with lesser risk of being identified and arrested, for such would involve a very tedious process…. Taking this into consideration, there is now an urgent need for law enforcers with sufficient knowledge of IT.”

    Joey Regala, Vice President and Head of Information Security Department, United Coconut Planters Bank
    “Banks should invest in skills, adding that there are effective counter-measures to fight hackers and avoid cyber attacks.”

    Stephen Cutler, Chief Compliance Officer, OmniPay
    “Size doesn’t matter…. What is ROI (Return on Investment)? It isn’t just about the profit. What is important is to sustain the trust and confidence of clients and stockholders. Trust is the goal. At the end of the day, what’s important is that you’ll be able to sleep soundly.”

    Emiliano Librea 3rd, Chief Information Officer and Partner, Punong bayan & Araullo
    “Size matters…. Eight banks are under receivership and more than 300 small banks are under investigation, many of them on the brink of collapse.”


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