Postbank: Rebuilding a stronger foundation for Filipino communities

MANILA, Philippines - Very often, poor communities have been looked down on, if not neglected, by the more powerful sectors of society. Many do not realize that the problem weighing down on underserved communities stem from their inability to access more efficient financial assistance as well as funds for their livelihood. This  is where Postbank starts to get involved.

When the Philippine Postal Savings Bank was established over a hundred years ago, the original intent was to provide financial services to its founder, the Bureau of Posts, but over time, it would be allowed to metamorphose into a network of microfinance offices servicing the financial needs of rural communities. The concept was to take advantage of the many unique assets of the post office – the existence of office structures which would translate into savings on brick-and- mortar expenses, the availability of needed utilities (power, water, telecommunications, transport, etc.) and most importantly, access to the delivery market base of the post office.

As a government savings bank established more than a century ago with the purpose of mobilizing savings, as well as providing access to credit and financial services in the countryside, Postbank has recently started to re-establish itself especially in these times when these services are now much needed by the unbanked communities, particularly in the countryside.

“We have started to establish our own identity as a bank. We’re not going to compete with other banks, but rather, we shall focus and concentrate to provide services that the unbanked and underserved communities need,” says Postbank president, Cesar N. Sarino. For him, he sees an urgent need to respond to the growing challenges in these underserved sectors of the society, and Postbank plans to help them by providing access to financial services.

He adds, “The passion that we’re putting into our programs is there. That is why we have started building good relationships with our partner local governments and of course, our clients.”

The shift to the countryside is a major thrust of Postbank. In addition to its branches, it is selecting a predetermined number of Microfinance Banking Office (MBO) from the unbanked and underserved municipalities of the country to form a smaller network of MBOs. These MBOs shall form the nucleus of countryside development banks collectively under the Philippine Postal Bank umbrella. Each year, more MBOs will be erected from Post Offices and join the group until such time that they will be able to merge, and metamorphose into a large, potent network of banking institutions.

In the selection process the following criteria were established – the market potential of the area, such as the need for banking services based on business opportunities, the presence of a Postbank branch in the area for ease of control and supervision, the acceptability of the micro bank by various community sectors and stakeholders, the prevailing peace and order situation conducive to the conduct of business, connectivity facilities for data transmission, and weather and environmental conditions.

After a long history of Postbank, which was challenged by different social and political struggles in the past, it has now re-structured its organization. It was in August 2011 when the new management, led by Sarino, took over. Since then, Postbank has executed a restructuring of the entire organization and instituted reforms in governance, adopted cost-cutting measures, and aggressively pursue lending opportunities. From being an unwieldy institution in financial straits, Postbank quickly demonstrated a strong potential and ended 2011 with a modest net income of P5.3 million, warding off an expected loss of over P20 million. The year that followed was even rosier for the bank as its income grew to P30 million in 2012 and even doubled to P60 million in 2013. Loans and deposits experienced a similar steady growth pattern.
All of these efforts were part of the Five-Year Strategic Plan, which was designed by PostBank in response to BSP’s requirements. Through this, the institution is driven toward sustained growth in the next five years with the five-year plan being divided into three parts – “where we are, where we want to be, and how do we get there.”

The success of PostBank was also boosted by the growth of its branches. It has already set up branch offices all over the country in an effort to expand its outreach capability in the rural communities. Aside from that, it will also employ the concept of tapping Philpost’s 1,500 post offices located in all municipalities to form part of the national campaign to mobilize funds in the rural sector.

As of now, the branches have significantly contributed to the growth of PostBank, creating the network of at-your-doorstep branch offices among all banking institutions.

Along with its growing number of branches and stabilizing financial performance was the introduction of its new services that are mostly focused on uplifting the lives of the underprivileged communities across the country. “Our objective in this bank is making people’s lives comfortable. Hopefully, by providing them with their livelihood and basic services, the community standards are uplifted and people are able to enjoy their lives more. That’s our thrust— providing financial contribution to the community so that people will have a better life,” says Sarino.

The role of PosTbank

While Postbank aggressively pursues its core banking functions, it also firmly carries on with its vision to serve as the government’s authentic countryside development bank. First, it has implemented a number of community- oriented programs including the MBO project. Through this, Postbank aims to establish its presence in unbanked municipalities which make up 37 percent of the population, and tap other communities which are also financially underserved. The MBO also allows the bank to make use of the 1,500 postal offices of the Philippine Postal Corporation located across the country where the bank won’t have to pay for brick-and-mortar expenses. The MBO will also enable Postbank to contribute towards achieving the government’s major objective of inclusive growth as well as of poverty alleviation since more than half of the country’s poor live in the rural areas.

Following its mission of serving as the vehicle for the efficient delivery of countryside credit and providing financial investments to widen economic opportunities, Postbank also works closely together with local governments. It aims to increase deposit generation activities from LGUs, government institutions, private companies, occupational groups, and individuals using the bank branches and the postal network. Furthermore, it also plans to strengthen its lending operations in which it will increase utilization of loanable funds to 90 per cent during its five-year strategic plan period, with more emphasis on salary and consumer loans to government and private sectors, developmental loans to LGUs and loans to small and medium enterprises.

So far, Postbank has successfully built a strong partnership with local governments. Sarino enthuses, “It is very encouraging that wherever we went, all the mayors were really thankful because for the first time, they now have a bank in their municipality.”

Recognizing the growing needs of Filipino OFW families for more efficient financial services, Postbank has also launched its Project Remit, a service offering Domestic Money Transfer (money delivery within the Philippines) besides its International Remittance System for OFWs. The entry of the Bank into the business is actually a response to an invitation by an international money transfer company, Agilivant LLC (AGL) to provide the payment and distribution services it requires to complete its own remittance program in the Philippines. The synergy tie- up between the Bank and the Philippine Postal Corporation convinced AGL that bringing the post offices into the transaction process would be the way to go. For its part, AGL is bringing in the necessary software, hardware, peripherals and interconnection requirements of the project.

More importantly, Postbank personally reaches out to even the most remote areas of these unbanked communities to make sure that they encourage these people to protect their money and promote financial literacy among them. To make its services more personalized and cordial, the bank even has a rule in which it doesn’t require people to go to their offices or branches, but instead, its loan officers are the ones to visit them in their neighborhoods. “Our loan officers servicing the livelihood requirements of the poor all have motorcycles so they can go up to 15 km from their office to their clients. We go to them and talk to them. That way, we are able to observe their financial capability and finances, as well as what they’re doing and their character. This is especially because our loans do not require collateral, and we have to depend on them by trust,” Sarino explains.

He continues, “We keep a close

interaction with them because this is our way of also teaching them to practice being responsible borrowers.”

Because Postbank also sees more demand for both domestic and foreign remittance services in many places in the country for migrant workers’ families, it has also set up its Postbank Remit where it acts as a payout agent of its partner institution abroad. With this, the bank has also tied up with private pawnshops and other commercial establishments in the communities it serves.

THE MAN BEHIND THE SUCCESS OF POSTBANK

The man who mapped the path to the success of Postbank, Cesar Sarino, has made remarkable contributions in reshaping the organization. The roles he previously played in different organizations have enabled him to give the bank a solid foundation. Before serving as the president of Postbank, he held significant posts in the public and private sectors. He is currently the chairman of the Philippine Postal Corporation as well as commissioner of the EDSA People Power Commission, aligning his goals with the Aquino administration’s straight path.

He was former president and general manager of the Government Service Insurance System and also became the secretary of the Department of Interior and Local Governments. He was also a member of the Board of Directors of Comsavings Bank, Urban Bank and Capital One Investment Corporation.

Acquiring his Bachelor’s degree in Economics at Ateneo de Manila University, he then completed his Master’s degree at the New York University.

He continues to carry on with his passion to help make people lead better lives, especially his countrymen from the provinces where traces his roots and his good life. Now that he is posted in a job where he can make a difference in other people’s lives, he is doing all he can to also share his blessings with his fellow probinsyanos. It’s payback time, he says.