Union Bank of the Philippines' Edwin R. Bautista discusses their massive API sandbox

With the number of API calls ballooning twentyfold in 2017, could it be the biggest API platform in Asia?

Edwin R. Bautista is the president and chief executive officer of Union Bank of the Philippines (UnionBank) who is responsible for starting the bank’s digital transformation in 2016. His more than 25 years of experience and game-changing skills put UnionBank’s name on the global digital banking map.

In this exclusive interview with Asian Banking & Finance, Edwin talks about the bank’s journey to convergent banking, its growing API sandbox, and its goals in climbing the ladder of the top universal banks in the Philippines.

You revealed at the ABF Retail Banking Forum 2018 – Manila that your API sandbox can compete with that of Singapore’s DBS in terms of size. Please tell us more about how it is growing so far.
Based on recent reports, we have developed over 400 API endpoints already under our platform. This has grown eightfold over the last year. But what is more important to track and measure are the API calls that we are getting. Internal API calls have grown twentyfold over the last year, whilst external API calls have increased by 300% over the last 4 months.

These numbers constantly change, so I do not want to claim that we have the biggest API sandbox in Asia. Although, we are very excited in the development of our API platform. This is key in establishing quick connectivity, not only within our internal systems, but as well as with customers and other external partners. Internally, the API platform has been instrumental in the enhancement and replication of features for our convergent banking application, The ARK, Rafa, and EON. Through the API, these channels are able to get information across various back-end systems to address transactions and queries real-time. Development for external parties are likewise faster since we do not have to repeat the onboarding up to testing process for new connections.

How do you see Union Bank of the Philippines as an effective digitalised bank?
To me, there are three major milestones. The first tier, you set the foundations first. This is where you put up your API platform, link all your different systems, hire the right people, set up data analytics. You do all of those things. Evidently, your impact on the market does not happen on the first tier.

In 2017, we were finally able to get The ARK, which is a concept branch, off the ground. This year, we are going to have five more branches like the ARK and 10 more lighter versions, called The ARK Light, all over the country. What will eventually happen in the other ARKs may not be exactly the same thing as what we originally had in the first ARK because we constantly learn and we adapt.

Now for us, that is a landmark because it incorporated all the different transformations that we had to undergo: the back-end system, the people training, and the process. The entire work process is on the cloud, and we had to get BSP (Bangko Sentral ng Pilipinas) approval to do that. We had to retrain the people because there are no tellers and the whole process is completely paperless.

The second tier is when we launched selfie banking which was a first in Asia. That was also a landmark and a statement for us. Meanwhile, the third is what we call convergent banking. We revamped our entire mobile banking and internet banking solutions where they converge into the same look and feel. Now wherever the customer is, our system can recognise him. User experience is key and these are the three big things.

Moving forward, we share the things that will define our next milestones. We are going to do the digital relationship manager who can provide advice to his clients with the help of robo-advising. We are also going to do robotics process automation. This is where the real money will be because there are lots of processes in banks in the Philippines that are still manual. With this technology, everything will be automated and it will just be the start. We will also use artificial intelligence, specifically cognitive learning, to provide the right solutions to our customers’ concerns. These are the three things that will define our accomplishments as an effective digitalised bank.

How are you planning to climb the ladder of the top universal banks in the country? What specific goals will you be focused on in the next 3 to 5 years?
In the short to medium term, we should have completed the enterprise architecture and organisational transformation needed for us in creating the bank of the future—we should be fully digital to the core.

On the customer front, we should have gained significant traction in our moonshot aspiration of growing our retail and middle-market base. The growth will be substantial for us to gain market share, not necessarily in terms of assets, but in terms of customer share of wallet. The digital channels we have built and continue building should contribute to this and that would result to higher recurring revenues.

At that point, our cost efficiency ratios should have likewise improved substantially. Industry cost-to-income is currently around 60% and we are close to 50%. A digital bank should range somewhere between 30%-40%, so we are initially aiming for 40%. The impact of business process automation, robotics process automation, and artificial intelligence should reduce costs significantly.

So in 3-5 years, the so-called “jaws of the tiger” should have been fully opened. It is unlikely that we will not be in the top 3 most profitable and most efficient banks in the country by that time.