By John Manning, International Banker
With the outbreak of a crippling global pandemic and a pronounced global economic slowdown, the last few years have been rather tumultuous for the world. They have also triggered profound changes within global banking, demanding that lenders remain flexible, nimble, and innovative in their digital-banking strategies to meet customers’ rapidly evolving needs and preferences. But few lenders have embodied such qualities over their many years more overtly—or more effectively—than Union Bank of the Philippines (UnionBank), one of Southeast Asia’s true digital-banking gems.
Its willingness to adapt to external environmental changes when needed, relentless appetite for bringing many of the region’s most cutting-edge offerings to market and unwavering dedication to delivering the best and most convenient solutions for its customers mean that UnionBank remains at the forefront of digitalisation in the Philippines and beyond.
Thanks largely to its dual-transformation strategy—Strengthening Today While Creating Tomorrow—UnionBank has continued to dominate digital banking in the country over the last few years. Anchored in technology, the strategy is based on two key pillars: (i) bolstering the efficiency of its core banking operations and (ii) experimenting with future business models—thus combining operational strength and business innovation to keep the bank dynamically moving forward.
“We don’t rely on traditional channels to grow our customer base—half of our customers were acquired via digital channels. Plus, we have the IT infrastructure built for scale,” UnionBank’s president and chief executive officer (CEO), Edwin R. Bautista, explained. “For example, if you have 10 million customers transacting daily, you have to be sure that you have the basic hygiene to support that. You have to be open 24/7 and provide real-time transaction support, so all will have to be straight through. You need to have six-sigma reliability or close to zero downtime, and your digital channels need to be highly secured.”

David Hardoon, Chief Data and AI Officer, UnionBank of the Philippines
And as is the case with many of the world’s most exciting innovations, data lies at the heart of this strategy. Internal and external data are employed to understand the bank’s customers better, improve operational efficiencies and manage risks, while, according to the bank’s chief data science and AI officer, Dr. David Hardoon, UnionBank’s innovative solutions and hyper-personalised offerings are fundamentally anchored on advanced technologies, including data science and AI (artificial intelligence), to serve the growing needs of increasingly digital-savvy Filipinos and ultimately ensure that no one gets left behind.
Dr. Hardoon provided the example of an AI-powered alternative credit-scoring solution developed by his Data Science and AI unit to help increase financial inclusion and sustainability nationwide as a typical data-driven solution developed by the bank. “With this solution operationalised, UnionBank and its fintech [financial technology] spinoff, UBX, offer loans to a broader range of individuals and small businesses who may not have qualified under traditional scoring methods,” Dr. Hardoon added. “This initiative effectively doubled the bank’s loan approval rate, continuing to help connect the unbanked and underbanked to accessible financial services.”

John Januszczak, President & CEO, UBX Philippines
Indeed, UBX lends considerable support to UnionBank’s digital-banking ambitions. With the Philippines being home to some two million registered businesses, mostly MSMEs (micro, small and medium-sized enterprises)—and millions more unregistered MSMEs—and with around 40 percent of them having no access to digital tools despite serving many millions of consumers, the bank’s fintech subsidiary provides the vital conduit through which businesses can provide financial services to these consumers. “With UBX, financial-services providers onboard their products and services to the UBX Open Finance Platform,” according to John Januszczak, UBX’s president and CEO. “UBX takes care of serving these products to hundreds of thousands of businesses through easy-to-use apps for MSMEs and APIs [application programming interfaces] for larger, digital-ready organisations. These businesses and MSMEs, in turn, serve millions.”

Lorenzo T. Ocampo, President and CEO, City Savings Bank
UnionBank’s innovation drive extends to other subsidiaries, such as its thrift bank subsidiary CitySavings. According to Lorenzo T. Ocampo, president and CEO of City Savings Bank, Inc., “We are the category leader for public-school teacher loans, public-sector salary loans and motorcycle loans to independent dealerships.” He further explained, “CitySavings has always cared deeply for its customers, which is the reason it succeeds. This concern came to the fore during the pandemic as the bank continued to serve its customers by equipping its sales teams with motorcycles and tablets, allowing them to reach customers and provide loans despite the lockdowns and border controls. Our core technologies also allowed for extensive WFH [work-from-home] capability, thereby providing BAU [business-as-usual] service levels.”
He concluded, “We ended 2022 with a sub-50-percent cost-to-income ratio, and we see room to be more efficient. The judicious selection and use of technology, data science and AI, coupled with the continuous cultural transformation of our people, not only bring down costs but also allow us to be the fastest and most convenient bank for customers. More than answering inquiries 24/7, our chatbot, Talk to Maria, provides a quick and easy way for new clients to apply for loans online.”

Manoj Varma, Consumer Banking Head, UnionBank of the Philippines
Clearly, such remarkable initiatives do little to quell UnionBank’s steep growth trajectory. To understand the bank’s current stature, one need only look at the monumental deal it completed last August to acquire the Philippine retail-banking operation of none other than Citi. “The consolidation of the two portfolios was a perfect set-up for us to expand our market reach,” observed Manoj Varma, the bank’s consumer banking head. “Citi and UnionBank’s customer bases complement each other perfectly—Citi brings strength in the affluent space with leading presence in Credit Cards & Wealth Management, while UnionBank’s strength lie in its mass-to-middle-market portfolio with strong presence in the Mortgages and Digital/Branch Deposits.” Mr. Varma also stated that he sees the acquisition as vital for providing meaningful opportunities for growth in the Philippines and propelling UnionBank into the upper echelon of the country’s leading consumer banks.
International Banker recently had the opportunity to probe further into the bank’s exceptional success in Southeast Asia by speaking with three of UnionBank’s leading lights: Edwin R. Bautista, president and CEO; Henry R. Aguda, chief technology and operations officer and chief transformation officer; and Ana Maria A. Delgado, chief customer experience officer and chief digital channels officer.
Welcome, and thank you for your time today….

Edwin R. Bautista, President and CEO, UnionBank of the Philippines
Mr. Bautista, I’d like to begin with you, if I may. As president and CEO, how satisfied have you been with the growth of UnionBank’s digital-banking business over the last couple of years? What have been the key highlights of this growth?
Edwin Bautista: We have been very happy with our record performances over the last couple of years. The digital transformation that we started way back in 2015 has prepared us to become a leader in digital banking—prepared us during the pandemic and the shift in customer behaviour to digital—and we now have over 10 million customers, of which over 5 million were new-to-bank customers from 2020 to 2022 during the pandemic. Our new digital account openings average almost 600,000 per year, while the running total from the beginning to the end of 2022 was 1.8 million.
We won the deal of the decade—the acquisition of the Citi consumer business in the Philippines. A large part of why we won it is because we came prepared and were technologically capable of integrating their business with ours. We also commercially launched UnionDigital Bank, one of only six digital banks licensed by the Bangko Sentral ng Pilipinas (BSP), which already has a loan and deposit business today.
We have posted strong core business growth, with record growth registered in CASA (current account and savings account) deposits and a high proportion of consumer loans to total loans. Our margins have never been this healthy, with recurring income growing fast.
The market has duly rewarded us for this performance, recognising the value derived from our strategic executions in the past few years. We probably have the highest total shareholder return compared to the industry. If you had bought UnionBank shares three years ago, you would have made more than 100 percent in total returns from the stock appreciation and dividends declared.

Ana A. Delgado, Chief Customer Experience Officer and Chief Digital Channels Officer, UnionBank of the Philippines
Ms. Delgado, referring to that landmark “deal of the decade” just mentioned by Mr. Bautista—the acquisition of Citi’s retail-banking operations within the Philippines—what were some of the key reasons for this acquisition? What do you believe it will enable UnionBank to achieve that was previously not possible, particularly regarding the customer experience?
Ana Delgado: This acquisition of Citi’s consumer-banking business in the Philippines accelerates our goal of becoming a great consumer bank in the country with one of the most diversified consumer-banking portfolios among the listed banks today. With this, we are now strong across three consumer businesses, namely credit cards, salary and personal loans, and mortgage loans. We also have a core wealth proposition ranging from services for entry-level wealth customers to private-banking clients. These synergies across both organisations will allow us to unlock tremendous value by enriching our customer proposition and elevating customer engagement.
UnionBank is currently the seventh largest publicly listed bank in the Philippines and is widely recognised as the industry’s leading digitally transformed and most innovative bank. With the addition of the Citi consumer portfolio, UnionBank is now a top-three credit-card issuer in terms of usage and spending.
You mentioned being the “most innovative bank” in the industry. What do you consider the most innovative product and/or service the bank has launched over the last year or so? Why is this offering so advanced, and how have UnionBank customers received it?
Ana Delgado: While we went all out and launched new digital apps and platforms that offer purely digital-banking services, we also recognised that some customers still preferred physical experiences but did not want the hassles of traditional branches. We rethought the branch’s role and launched The ARK, the first fully digital bank branch in the Philippines, which makes banking at all our branches efficient, personalised and responsive to our customers’ needs and preferences.
We have since rolled out this experience to all our branches, and our branch channel has an NPS (Net Promoter Score) north of 90. As the chief customer experience officer, this is the ultimate measure of how our customers feel about the bank or a specific innovation.
That’s a very impressive score. I also noticed that the bank established the UnionBank Innovation Campus, further strengthening its banking-innovation credentials. Mr. Bautista, what is the purpose of this campus? And what does it say about UnionBank’s efforts to modernise banking in the Philippines?
Edwin Bautista: Being the first of its kind in the industry, the UnionBank Innovation Campus will serve as the bank’s hub for research and development with the goal of enhancing its digital-innovation capabilities. It is home to various innovation centres, such as UnionDigital, the digital banking arm of UnionBank, and the first-ever Asian Institute of Digital Transformation (AIDT). The campus will also be a centre for learning and collaboration, and it will play a crucial role in propelling UnionBank’s advocacy to “Tech Up Pilipinas” to greater heights.
We believe that we are in a position to help our local entrepreneurs and their companies become more globally competitive by sharing what we have created and learned. Our rallying cry over the past three years has been—Help “Tech Up Pilipinas”. We are keen to assist the government in whatever way we can to speed up our country’s digital adoption.
In his keynote speech at the Innovation Campus’s inauguration, President Ferdinand “Bongbong” (Romualdez) Marcos Jr. said, “The initiatives that we have, such as [what] UnionBank is doing with this campus, that we have just inaugurated today, are precisely the kind of innovations, the kind of forward-thinking operations and actions that we will need, not only in the private sector but also in the public sector, so that we in government can be participants in the new digital world, wherein we are living more and more in our day-to-day lives.”

Henry R. Aguda, Chief Technology and Operations Officer and Chief Transformation Officer, UnionBank of the Philippines
“Participants in the new digital world”—that’s an interesting choice of words given the hype that has emerged recently surrounding the metaverse, perhaps the most immersive example of participating in the digital world. Mr. Aguda, what is the bank’s view of the metaverse? How is the bank leveraging the metaverse to improve the customer experience?
Henry Aguda: The metaverse offers a number of exciting opportunities to improve the customer experience. For example, UnionBank has plans in the pipeline to utilise metaverse technology to create virtual branches and customer-service centres, allowing customers to interact with bank representatives in a highly immersive and interactive environment. With this, we aim to provide customers with a more personalised and convenient banking experience, as well as the ability to access a wider range of financial services and products.
Additionally, the metaverse provides opportunities for us to experiment with new business models and revenue streams, such as virtual real estate and financial services for virtual assets. Metaverse technology is relatively new, and, as such, there are a number of technical, regulatory and cultural hurdles to overcome. However, we at UnionBank believe in the value it brings to our customers and the banking industry, making it a technology to keep an eye on in the coming years.
It seems the metaverse could provide tremendous scope to enhance the customer experience. Indeed, banking globally is witnessing a rapid evolution in what constitutes a “satisfactory” customer experience. Ms. Delgado, as chief customer experience officer, what would you say have been some of the key milestones in this evolution for UnionBank customers over the last year?
Ana Delgado: With the sharp rise of digital and remote commerce, many customers have become increasingly frustrated with their banking experiences. This convinced us that we need to be the bank that makes banking fit most seamlessly into our customers’ digital lifestyles. For many years, people put up with long lines and waiting times at branches, limited branch hours, too many paper forms, unexplainable interbranch fees and many more inconveniences resulting from traditional-banking constructs. We saw an opportunity to break away from that and redefine banking as something that can uplift life and not get in the way.
With this objective in mind, we carefully designed our digital and in-branch experiences to remove the friction present in traditional-banking processes while ensuring security and reliability remained our top priorities. Since launching our new platforms, we have seen tremendous growth in our digital business and are seeing higher NPS compared to our peers, particularly in our app and branch experiences. This affirms that we are on the right track.
Mr. Aguda, the bank has previously stressed that its digital-transformation strategy is a process that will continue indefinitely. Is this still the case? If so, what does this open-endedness say about UnionBank’s commitment to continuous evolution?
Henry Aguda: Yes, that is still the case and will be for years to come as we at UnionBank have embedded in our DNA our customer-centric mindset with technology at the forefront of our efforts as customer needs constantly evolve, hence the need to be agile and adaptive to change as we innovate to stay competitive.
We recognise that digital transformation is not a destination but a journey. The bank understands that it must continuously assess and adapt its technologies, processes and customer experiences to stay ahead of the curve and meet the changing needs of its customers. This open-ended approach to digital transformation demonstrates our commitment to being a leader in the digital-banking space and our willingness to embrace new technologies and ways of working to serve our customers better.
Finally, Mr. Bautista, what are some of UnionBank’s most significant goals and challenges in 2023? You previously told us that UnionBank’s vision “has always been to be a digital trailblazer in the country as well as in the region”. Would you say that this vision has already come to fruition?
Edwin Bautista: For our 2023 goals, we have set a three-year target of becoming the largest and most profitable consumer bank in the Philippines. It is a bold target. But we believe it is doable. We are already in the top three for certain retail products and have been posting record customer growth.
We believe we are a leader in terms of digital in the country (and maybe the region). But that is not really the end objective; it is just a way for us to get to our end objective. Our real vision is to build a bank of enduring greatness. If banking moves towards being 100 percent digital and mobile, embedded banking and open finance, we will be ready.
It definitely sounds as if UnionBank is ready for anything. Thank you again for speaking with us today.