[02 AUG 2017] Giovanni “Gino” Gabriento knows this all too well: rural banks are facing enormous challenges. He had seen a few of them fold up, because they faced succession woes and were not able to adopt as fast with the times. He wants to address it the best he can, and he wants to do it now.
And so when he was elected president of the Rural Bankers Association of the Philippines (RBAP), he gladly took it as a challenge and privilege. As one of the youngest RBAP presidents, he now leads the country’s more than 400 rural banks.
Gino is cool. He’s easy to be with. He’s edgy. And most certainly, he understands the vast untapped markets that can save the rural banks: the millennials, the unbanked, and the underserved. He knows them because he’s a millennial and lives in the countryside.
This 35-year-old president of the 60-year-old Rural Bank of Digos believes he can help the rural banks understand the quirks and lifestyles of the millennials. He also has the digital answer in bridging the rural banks and the underserved and unbanked markets such as fisherfolk and merchants.
“I think one of the reasons why they elected me is they (RBAP) want to change the image of rural banking,” Gino says, adding that rural banks are actually cool, techy, and for the millennials (or the Generation Y) who are poised to drive economic growth in the years to come.
No Closure of Banks During My Term
During his term, Gino hopes to stop more banks from closing by enticing the young generation to join the industry and by bringing rural banks closer to both its existing and untapped customers, among other solutions.
These days, some of the family-owned banks are forced to close or return their license because too few among the third and fourth generations are willing to join the business. “As an intergeneration banker, I want to entice the younger generation to activate their passion button and join their rural banks,” Gino says.
Rural banks, he says, should cater to the millennial market. Comfortable and confident with technology, these consumers have been online for a few years now. But it is the rural banks that have taken time to keep in pace.
They should also take advantage of the big opportunity to serve the unbanked and underserved market. Majority of households still don’t have a bank account, yet own a mobile phone. Many of the rural banks, however, have yet to go digital. These critical markets need to be served.
Fintech Key To Rural Bank’s DX
It’s now time, Gino says, for rural banks to make their “digital transformation” or DX, and he sees financial technology services as a means to make this happen. Fintech, he believes, enables rather than disrupts the banks in bringing efficient, cheap financial services to the unbanked and underbanked such as the millennials. The customers themselves are the ones looking for convenience and new ways of transacting financially.
How he will bridge the gap between these markets and the banking sector is through collaboration and partnerships with FinTech firms such as FINTQ, the FinTech arm of Voyager Innovations, which is the digital innovation subsidiary of Smart Communications under the PLDT Group.
The challenge, Gino notes, is that capital expenditures in technology are very costly for resource-constrained small banks. “But of course, there are other alternative services where you can be cost-efficient and cost-effective, and FINTQ is one of them. FINTQ’s solutions such as Lendr level the playing field where rural banks or small players could compete head-on with the big boys. Ultimately, technology is the great equalizer,” Gino says.
Lendr Enabling Banks To Go Digital
In November 2015, RBAP signed a collaboration agreement with Voyager Innovations to help rural banks provide lending services via FINTQ’s Lendr, an online platform that matches lenders and borrowers.
Accessible via multiple channels and regardless of any bank or mobile network, the fully digital platform handles end-to-end consumer loan services, from account creation to loan application, and from loan processing and approval to loan repayment.
FINTQ came up with an innovative model so small banks can utilize the platform without shelling out too much cost. Gino says that RBAP-affiliated banks will enjoy its shared services model instead of individually paying for the fees. So far, at least two RBAP-affiliated banks have already accessed Lendr through the partnership, with BSP approval.
“We’ve built Lendr on a simple promise of enabling banks to empower Filipinos. In doing so, our platform helps rural banks reduce their capital and operational expenditures while at the same time expanding their reach to the millennial, unbanked and underserved markets,” says FINTQ Managing Director Lito Villanueva.
To this day, Lendr has the most extensive digital footprint covering 100% of 81 provinces, 90% of 145 cities and 15% of 1,490 municipalities. Approximately 23% of them are from low-income areas. So far, Lendr has already disbursed in excess of P23 billion to more than 200,000 clients. It registered annual growth rates of 50% and 33% in loans released and number of borrowers, respectively.
The future looks challenging, Gino admits. Despite their declining numbers, they are well capitalized and their branches are increasing. But for them to serve the millennials, the unbanked, and the underserved in the countryside, rural banks must live and breathe digital as soon as possible. “You have to adopt because if you do not innovate, if you do not change, you will be definitely left behind. Digital is both the present and the future. It is simply essential,” Gino says, brimming with joy.
“You have to adopt because if you do not innovate, if you do not change, you will be definitely left behind.”
– Gino Gabriento, President of Rural Bankers Association of the Phillippines