Having established a consumer banking division only in 2010, Bank of Commerce, Philippines, is aiming to strongly differentiate itself in the retail banking sector among well-recognised players by deploying FICOs technology solutions and strategy consulting services. Leah Castañeda, vice president and consumer lending division head, speaks to Meghna Mukerjee
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Philippines 15th largest lender by assets, Bank of Commerce (BoC), is using global analytics and decision management technology vendor FICOs decision management and analytics solutions to manage risk better and drive profitability in its newly launched consumer credit product line.
BoC established a consumer banking division in 2010 and has begun introducing personal loans, credit cards, mortgages and auto loans.
BoC, that has 124 branches across Philippines, is specifically using the FICO Blaze Advisor business rules management system with the aim of designing and making its origination, decision, and customer management strategies operational, alongside four advanced scoring models, to evaluate customer credit-worthiness and manage risk.
By adopting the new FICO solutions, BoC aims to develop appropriate management skills to apply scoring solutions effectively and manage credit portfolios profitably.
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By GlobalDataThe FICO solutions were fully deployed by BoC in December 2011.
As consumer banking is a new market for BoC, Leah Castañeda, vice president and consumer lending division head at the Bank of Commerce, says the lender wanted to enter the sector in the strongest possible position.
We picked FICO because of the name and reputation that FICO already has in North America specifically. We also found out we are one of the first banks in the Philippines to contract FICO for this specific assignment.
With FICOs technology and strategy consulting expertise, we have a powerful and reliable underwriting solution to help us mitigate the risks inherent in this venture, as well as a strong differentiator against our competition.
The main objective was to really make our decisioning process more systematic and more scientific and to minimise whatever risk that comes along with manual evaluation, explains Castañeda.
Castañeda adds that the lender also aimed at making the evaluation process more streamlined, and automating that particular part of the process has lead to shortening BoCs turnaround time significantly in a market where the products are all the same.
Everybody else has applied automated loan origination systems and they have an army of credit evaluators and so on. They have already built their structure and we wanted to come in to the landscape aggressively, but at the same time with the risk management issues addressed, says Castañeda.
The retail banking market in the Philippines is incredibly competitive in terms of pricing and not so much in terms of product features, informs Castañeda.
Previously the banks at least had their interest rates at a certain amount and then all of a sudden HSBC decreased its interest rates by half, which forced most of the banks to follow suit, so of course we had to do the same as well.
In terms of the other products we are seeing their rates going lower as well, says Castañeda.
In Philippines retail banking sector, BoC considers the Philippines Savings Bank as its biggest competition, says Castañeda.
The Philippines Savings Bank is not a universal bank but in terms of its processes or its speed to market, and the availability of the products through different channels, it is super automated so that is our challenge, says Castañeda.
BoCs customer base on the consumer banking side is steadily moving up according to Castañeda, and as of February 2012, BoC had over 3,000 customers on board only on the loans side, which would comprise of housing loans, auto loans, and salary loans.
BoC offers credit cards as well and there are estimated to be fewer than 10m credit card users in the Philippines, but that number is expected to grow rapidly over the course of 2012.
BoC also plans on introducing third party sales channels through real estate developers and also establish partnership agreements with the car dealers to push its loan products in the market.
Right now we are solely relying on our branches to bring in the loan applications but we are expanding our distribution network to include more opportunities, says Castañeda.
BoC also has its advertising and promotional strategy, which mainly consists of below the line activities.
We have employees at the BoC who are going to earn commission from every referral they make. We have also built partnerships with organisations such as schools and car associations where we have already established the presence of a BoC loan product, says Castañeda.
According to Castañeda, BoC has also made an attempt to add flavour to the look of the branches by putting up a lot of marketing material related to the loan products from posters to banners to brochures advertising the loans across the Philippines.
Plans are in the pipeline to launch an online application for the loan products as well, as the internet and internet banking are both extremely popular in the Philippines.
Mobile banking platforms in the Philippines are also very sophisticated, with smartphones particularly the iPhone being a rage, and the popularity of social networking Facebook and Twitter particularly is immense, according to Castañeda.
Though BoC does not have any presence over social media platforms yet, it is planning to launch itself across social networking websites later in 2012, and also dedicate a separate social media page to loan products, says Castañeda.
BPI Family Savings Bank, one of the largest banks in the Philippines, has come up with a Facebook page recently specifically for its housing loans and they have a loan calculator, which we are also trying to duplicate for BoC, adds Castañeda.
