MANILA, Philippines — Thrift banks are leaning on a hybrid model that combines branch-based relationships, digital platforms and artificial intelligence to remain relevant to customers whose banking habits are rapidly changing, according to the Chamber of Thrift Banks (CTB).
As the CTB marks its 52nd anniversary this year, CTB and Equicom Savings Bank president Jaime Valentin Araneta said the industry is facing a banking landscape that has “transformed beyond the conventional,” but the core mission of thrift banks remains anchored on serving households, small businesses and communities.
“Our hybrid business model of brick and mortar branches and digital platforms float our collective thrift banking boat amid the rising tide of cloud-native digital banks, non-banks and electronic money issuers (EMIs), rapid adoption of artificial intelligence (AI) and large language model (LLM), and changing generational customer profiles and expectation sets,” Araneta said.
“We stay relevant, not aspirationally or performatively, but by playing to our traditional strengths while critically adopting and deploying new technologies and platforms,” he added.
This year’s CTB convention carries the theme “CTB@52: Staying True to Customer Relevance — Through the Nexus of Traditional, Digital, and Artificial Intelligence.”
For Araneta, the theme reflects the pressure on thrift banks to modernize without losing the personal relationships that have long defined their role in the financial system.
Thrift banks have traditionally served as community-based financial institutions, with a strong presence in housing finance, micro, small and medium enterprise (MSME) lending, salary loans, consumer finance and deposit-taking outside the country’s largest corporate banking centers.
Araneta said that as customer expectations shift, thrift banks cannot rely solely on their branch networks. Clients now expect faster onboarding, more convenient transactions, better access to credit, stronger fraud protection and service channels that remain available beyond regular banking hours.
“Digital transformation is an existential imperative for banks,” Araneta said. “If we are truly customer-centric, we need to service and delight them as to their preferred or most convenient and efficient platform or channel, be it the traditional branch or online and mobile banking app.”
The shift has raised the stakes for thrift banks, which must now compete not only with universal and commercial banks, but also with digital banks, electronic money issuers, fintech companies and non-bank platforms that are reshaping customer expectations around speed, access and convenience.
Still, Araneta said the future of thrift banking will not be fully digital. Instead, he said thrift banks must build a model where technology strengthens, rather than replaces, the human relationship between banks and their customers.
“Customer trust and stickiness are still and all engendered and preserved by interpersonal, face-to-face engagement,” he said. “But to hasten transactions and service deliveries, and to provide them even off-banking hours, we need to integrate digital channels for every stage of the customer journey.”
AI is expected to play a growing role in this transformation, particularly in areas that can improve efficiency, decision-making and customer service.
Araneta said AI could help thrift banks reduce manual workloads in middle- and back-office functions, allowing employees to be reskilled and redeployed to higher-value tasks. He said AI is also useful in credit decisioning, fraud detection, data governance and more personalized customer engagement.
“By embedding AI across middle- and back-office functions, we can dramatically reduce manual processes and workloads. And re-skill and re-deploy human capital to higher-value tasks,” he said.
AI can also help thrift banks improve credit underwriting and risk management, especially for customers with limited formal credit histories. For smaller businesses and households, better data use could support faster loan processing and more tailored financial products.
Araneta said the convergence of traditional banking, digital platforms and AI is already reshaping customer onboarding, credit initiation, operational efficiency and client engagement.
The next stage, he said, involves agentic AI, which goes beyond generating responses and begins performing tasks on behalf of customers.
“Agentic AI is helping redefine customer engagement by enabling personalization, speed and proactive service delivery,” Araneta said.
He said generative AI has already enabled more personalized and real-time conversations beyond traditional scripted chatbots. But agentic AI could take this further by helping process loan applications, onboard depositors or cross-sell other products and services.
For thrift banks, the challenge is to adopt these tools in a way that fits their scale, customer base and risk appetite. Araneta said CTB’s role is not only to support digital adoption, but to make sure technology strengthens traditional banking disciplines.
“We see CTB’s role going forward as being not just an enabler of digital adoption but a catalyst of traditional disciplines enhanced by right-fit digital solutions that won’t break the bank, so to speak,” he said.
Cost remains a major hurdle. Araneta said the fraud management systems required for compliance with the Anti-Financial Account Scamming Act can be expensive, particularly if banks rely on third-party providers. Mobile and online banking systems also require significant investment.
However, he said software-as-a-service and subscription-based models have become more cost-effective alternatives to heavy capital expenditure. The large number of technology firms and fintech providers seeking bank clients has also created room for competition and negotiations.
Another major challenge is cybersecurity. Araneta said advances in AI and large language models are moving rapidly, making it difficult for banks to keep pace with bad actors that also use new technologies to target customers.
“Boards of banks must see their way clear to investments in cybersecurity commensurate to their institutions’ digital centricity or maturity,” he said. “For the cost of a data breach is far more expensive.”
Araneta said cybersecurity also begins with users, as CTB continues to encourage member-banks to strengthen cyber hygiene through collaborations with regulators and knowledge partners.
Despite the growing importance of AI and digital platforms, Araneta said thrift banks must avoid treating technology as an end in itself.
“If anything, the growing proliferation of digital and artificial solutions should make us even more human toward our clients and other publics,” Araneta said. “We should be that much more empathetic, attentive, responsive and proactive to our customers.”
Editors Note: This branded content for Chamber of Thrift Banks is not covered by Philstar.com's editorial guidelines.