One lesson learned from a Filipino Bank President. Might just be the most important one.
“May you live in interesting times.” – says the old Chinese curse. Looking at all the developments that happened during the AD 2020 (and more coming by the day), that old saying is holding true to its promise.
Corona induced crisis, lockdowns, customer defaults, loan repayment deferrals, Non-Performing Loan explosion, job losses, businesses going bust, unprecedented times for Retail and Travel industries, governments and regulators scrambling with measures to assist the economy.. You name it – we got it. We are still waiting for locusts and frogs though, to make the events seem more Biblical.
The Philippines, while affected with a bit of delay, have not been spared from the global calamities – the compounded effect to the local economy might be felt much more than elsewhere. Financial sector is hit, there is no question about it. Rural financial sector even more so, due to slower pace of digitalization when compared to the banks headquartered in the urban areas. On top of that, clients of rural banks and financial institutions of all sorts, have up until now, not been known as early adopters of new flashy technology. This might be about to change, though.
We at Oradian, have been closely monitoring the developments, both coming from the news, reports by our Filipino offices and what the cumulative (coming data from a large Rural financial customer base) has been telling us. Being data obsessed technologists that we are at Oradian, it is both our passion and duty to hear the story in the wind that is being told.
And the wind, it is one of change.
This is not a story about the data, although the data paints a very worrying picture about the Perfect Storm brewing on the horizon. This is a story about the human resilience, creativity and survival, in spite of overwhelming odds. A story of A c t i o n .
Rewinding back to the first week of August, AD 2020. Worried by the prospects of Rural Banking market sector in the Philippines, it was decided to launch initiatives of assistance through advice and consultancy, aimed at banks and institutions willing to take advantage of Oradian expertise and cumulative data. As one of the first examples of this initiative, kindly supported by several RBAP Federations, we started with a series of video conferences where financial and technology experts offer their insights and tactical advice. More importantly, these types of video conferences, during times when any type of physical networking and meeting has become quite challenging to organize – represent a platform for communication for Bank leaders and Presidents. Not just between experts, but between Bank leaders themselves, discussing challenges, findings and exchanging experiences. Experiences and actionable, tactical advice on things that helped some of them improve the position, counter the effects of the lockdowns and for the most agile ones – still manage to grow in this new reality.
During one of those video conferences, while discussing the most pressing issues, the most troubling and pressing effects of the Pandemic crystalized as the inability of customers to access the physical branches of the banks. Quite a significant portion of their customers are still able to afford paying back the loans, but are physically not able to bring cash to the branch and settle it. In discussion with the Bank Presidents, there was a conclusion that most of the banks were waiting for the lockdown to finish so that the old ways in dealing with the customers comes back to life, and the whole situation reverts back to normal.
And all of a sudden, one of the most experienced Presidents, that has weathered quite a few storms in his day, honoured us all with a story. A story that was quite different, since it wasn’t about the banking business, loans, repayments, collections, interest rates, BSP, P&L …