The drive for growth and distinction in the Philippine banking industry
The Philippine economy continues to grow and local banks are expected to stay on their toes in the coming years. This is a sentiment shared by many banking officials across the country.
Despite a stable and positive outlook, the banking industry in the Philippines faces many challenges. There are 550 towns or 22 million Filipinos that have no access to a bank in their location. Given the geography of the country, this provides both an obstacle and an opportunity at the same time. With new technologies, new ways emerge to reach remote areas and provide services where it was not profitable to do so before, and banks have yet to fully capitalize on these technologies.
Another challenge is Basel III compliance. Instead of taking a phased-in approach preferred by most countries and allowing for a smooth transition with low impact on the market and banking industry, the Philippines implemented Basel III in a single step on 1 January 2014. By doing so, most banks are facing immediate capital shortfalls. Constraints from Bangko Sentral ng Pilipinas prevent the use of debt markets to mitigate these shortfalls.
The third major challenge is the ASEAN 2015 integration. With economies growing closer together, supply chains become increasingly regional with rising demand in cross border financing tools. In this environment, banks are trying to gear up for the opening of markets in the region. Compared with strong banking hubs of the region, Philippine banks have a lot of homework to do.
In its fourth consecutive year, The Asian Banker’s Philippine International Banking Convention (PIBC) will highlight innovative developments that take place in the Philippine banking landscape and display best practice examples from the region. This could help unravel the challenges of financial inclusion, compliance and ASEAN integration.
Key working sessions include: