First branchless bank starts pilot testing

MANILA, Philippines - The BPI Globe Savings Bank (BanKo) is presently pilot testing retail microlending using mobile money technology (MMT) in an undisclosed area.

BanKo is a thrift bank that will specialize in microfinance and branchless banking using mobile teachnology. It is co-owned by the Bank of the Philippines Islands (BPI), Globe Telecommunications Inc. and Ayala Corp.

It has likewise entered into an arrangement with the Philippine American Life and General Insurance Co. (Philamlife) for microinsurance, through Ayala Life Assurance Corp. (Ayala Life). Philamlife acquired majority stake in Ayala Life as a vehicle for bancassurance or the sale of its products with BPI and its subsidiaries.

“We are already pilot testing retail deposit-taking, lending and micro-insurance to be able to fine tune and roll out the technology platform,” Josaias T. dela Cruz, BPI vice president for microfinance said in the sidelights of the Mobile Money Transfer (MMT) Asia Pacific conference and exposition held at the EDSA Shangri-La yesterday.

The technology platform will eventually be introduced to its wholesale clients such as microfinance institutions (MFIs).

BanKo will go into wholesale and retail microlending with emphasize on the former, making it the first bank in the Philippines to go branchless.

It is set to formally open its head office next month, and it will immediately have MFI client base from BPI’s microfinance unit, which has roughly P18 million in micro-loans and 170,000 micro-borrowers.

Also next year, it will open several regional centers — not branches — to establish relationships with other MFIs, rural banks, and non-bank financials institutions.

De la Cruz said that BanKo would be a convergence of microfinance services, banking, telecommunications, micro-insurance and “the Ayala style of corporate social responsibility.”

There are 450 MFIs servicing three million micro-borrowers, with a portfolio of approximately P8 billion.

Approximately, 80 percent of the Philippine population or roughly 72 million individuals are classified as un-banked or under banked. And roughly half of that or 36 million are considered as earning $2 (P100) per day.

At the same time, half of the country’s population own at least one mobile phone. Roughly 90 percent are classified as pre-paid and the rest are post-paid.

One half, or roughly 1.6 million, of active mobile banking users are un-banked. Twenty-six percent of active users have incomes below $5 (approximately P250) per day, and that un-banked mobile money users spent $1.90 (roughly P9.50) more per month than peers.