Banking on innovation
AN EMPHASIS ON HUMAN RESOURCES AND CUTTING EDGE TECHNOLOGY HAS ENABLED AMBITIOUS FINANCIAL PLAYERS SUCH AS IBANK AND RCBC TO JOIN THE MAJOR LEAGUE OF PHILIPPINE BANKERS

RAMON Y. SY President of International Exchange Bank (iBank)

Opening a new bank may not seem the wisest expenditure of time and talent in a country like the Philippines where a great many existing institutions (45 to 50) compete for what is in reality not all that much in asset terms. But if ever there was a good reason for bucking the common wisdom, the founders of the International Exchange Bank (iBank) had one when they convinced Ramon Y. Sy to come out of retirement in 1995 and take charge.
A 50-year-veteran of the sector, Mr. Sy has a reputation as a banker’s banker. He started off as a messenger boy at the Bank of America and, in best rags-to-riches tradition, working long hours and going to night school, made chairman 25 years later. Afterwards he took over as President and CEO of the United Coconut Planters Bank and retired in 1993, only to find that it is hard work to take it easy when working hard is easy to take.

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The challenge of organizing and building a major financial institution from the ground up was about the only thing that had not yet appeared on his résumé and too good an opportunity to be passed up. “I felt there was room for another well managed, well capitalized bank. Even if we didn’t have the size or the age–people tend to see those as indicators of stability, though that isn’t necessarily the case–we could position ourselves by being different.
“In terms of products, ours are the same as everybody else’s. You can call it whatever you please, but in the end, a savings account is just a savings account. So what we did was to create an environment of service. We look for service-oriented people, spend a lot of time and money on training them, and make sure they deliver.”
To a large extent, says Mr. Sy, first impressions are what count. “We try to make our premises spacious and airy; there are no metal grills between client and teller. We make sure even the guards are courteous and well informed. Our rest rooms can compare to the best hotels.” The second pillar of iBank’s success is the somewhat heretical notion that a bank has to sell itself, rather than wait for people to walk in the door.

“We have an in-house training program that teaches our sales people to go out and sell the bank.” Cost management also makes a difference. “Our philosophy is that how much you spend is less important than spending it right. I don’t want to be told, ‘Sorry, sir, we just don’t have the budget.’ On the other hand, just because money has been allocated for something, that doesn’t mean you have to spend it. Budgets are made by people like you and me and can be changed by people like you and me.”
Service at iBank also means giving the customer a little more than he was expecting. All 59 (soon to be 70) branches are fully IT-enabled which allows for customers to cash a check at any one of them, thanks to an on-line signature verification facility. Recently the bank added to its product list thanks to a deal that allows recipients to cash iRemit Internet money remittances from overseas or have the amount credited instantly to their accounts.

Within a year of its start-up, iBank had quadrupled its assets and since has continued to post phenomenal growth so that it is now ranked in 15th place. In return on equity, iBank is already in the top three. As of June this year it had already surpassed its total net income for all 2000. Says Mr. Sy, “our objective was to get up there in the top ten and I still see that happening somewhere down the road. Meanwhile, we are happy if people see us as one of the larger, more aggressive banks, forward-looking and modern.”

Alfonso S. Yuchengco Executive Vice-Chairman and CEO of RCBC

Another institution on the cutting edge is the Rizal Commercial Banking Corporation, known universally as RCBC. It operates as the financial services arm of the Yuchengco Group of Companies, in association with the Sanwa Bank of Japan, which holds a quarter of the equity. That relation and other partnership arrangements allow the bank to offer a broad range of life and other insurance products. As with other long-established players, more than half of RCBC’s turnover was coming from a nucleus of corporate clients, so when business fell off owing to the difficult economic climate, it was a signal that it was time to branch out deeper into the retail segment.
“We made a decision to realign our portfolios and diversify our risk,” says Alfonso S. Yuchengco, RCBC’s Executive Vice-Chairman and CEO. “We have become the third-largest issuer of credit cards, number one in auto loans and number two in real estate. You get better spreads.” Simultaneously, the bank launched Enterprise Banking, an internet-based platform for business clients that offers them services such as real-time fund transfers and account monitoring. Says Mr. Yuchengco, “we are always on the lookout for possible strategic alliances, particularly in the area of new technologies, be they systems, products or services.”