OF Bank to go digital by 2020

MANILA, Philippines — The government is targeting to transform the Overseas Filipino Bank into a digital bank or a “beta” bank by the middle of next year, an official of the Land Bank of the Philippines said.

In an interview, Landbank president and chief executive officer Cecilia Borromeo said the bank and the Bangko Sentral ng Pilipinas (BSP) are working together to draft the regulations that would enable the OF Bank to perform as a branchless and digital financial institution that caters to overseas Filipinos.

Borromeo heads the board of OF Bank, being a subsidiary of Land Bank of the Philippines.

“We’re working to transform it into a branchless digital bank, and we are in close coordination with the BSP,” Borromeo said adding that “the BSP calls it a beta bank. Together with the BSP, we are crafting the rules.”

According to Borromeo, the Landbank is expecting to have the digital bank “up and running by June of 2020.”

If launched successfully, Borromeo and Finance Secretary Carlos Dominguez said OF Bank would be the first digital bank in the Philippines.

“You know, it just makes sense to do that because the potential customers of the OF Bank are overseas Filipinos. There are more than 10 million already. Now if you’re going to go to the traditional way of doing banking, of setting up a branch, getting permission from the different countries to set up a branch, it’s going to take you forever. It’s better to spend time on doing it digitally, and that’s easier to reach all your potential customers,” Dominguez said.

“That’s the way we envision operating the OF Bank. We want to leap-frog every other banking institution in this country,” he said.

Once established, OF Bank would be able to provide its services digitally, including payments, remittance, lending, insurance, and investments.

Meanwhile, Borromeo said the establishment of a system for OF Bank would not take a lot of resources for Landbank as it already has a strong digital platform.

“Actually it (funding requirement) won’t be much because the IT platform of Landbank is robust and it can handle that, we just need to tweak it and the digital bank will be treated like a branch of Landbank so it will not entail a huge investment,” Borromeo said.

In September 2017, President Duterte issued Executive Order 44, ordering the Philippine Postal Corp. and the Bureau of the Treasury (BTr) to transfer their Postalbank shares to Landbank at zero value.

 In compliance with the EO, the Postalbank was converted into the Overseas Filipino Bank, which will be a “policy bank dedicated to provide financial products and services tailored to the requirement of overseas Filipinos.”