Aboitiz-led Union Bank of the Philippines (UnionBank) is targeting to onboard over two million of digital banking customers this year through open banking and open finance systems.

During UnionBank’s E-Media TalkTales on Tuesday, June 28, Senior Vice President and head of the bank’s Fintech Business Group, Erika Dizon-Go said the fast-paced growth via open finance application programming interfaces (APIs) and its big part in open banking interoperability will enable UnionBank to double its current one million online-based customers.

“At the end of the day, usage or used cases is what drives open banking,” said Dizon-Go. And with increased partners in the e-commerce space, her “fearless forecasts” is that “around two million by end-2022 from one million right now” and this is an organic growth from UnionBank’s digital platforms.

Meanwhile, UnionBank’s digital bank subsidiary, UnionDigital, is on track to be launched and to start operation next month.

Basically, open finance promotes consent-driven data portability, interoperability, and collaborative partnerships among entities. It extends the principles of data sharing, security, and privacy across the different financial products. The difference between open banking and open finance is that the former is limited to banking while the latter gathers data from financial technology firms or fintechs and e-wallets.

Onboarding two million into the bank’s open banking and open finance systems will reshape customer experience, said Dizon-Go. API technology will allow the movement of data and the shifting of traditional banking clients to digitally access e-commerce and e-wallet platforms. Citing industry data, she projected that by 2023, 75 million of 112 million Filipinos are going to be e-wallet users. By end-2022, there are 53 million e-commerce users.

At the moment, Dizon-Go said one million of UnionBank customers have already linked their accounts “in such a short period of time” across all e-commerce and e-wallets, up 100 percent from 500,000 in 2021.

“That’s a big deal, considering we wouldn’t have expected that number to be quite so large at the onset and immediately,” she said.

While she could not as yet predict how much of a contribution UnionDigital will make in expanding new accounts opening via open finance, Dizon-Go said they expect it to be substantial.

“(We’re still) projecting UnionDigital will launch this July. After July, we’re expecting that we’re going to hit the ground running,” she said. “How big we project UnionDigital will help in our bottomline, I can’t say that for sure now but we are hoping it will be a big contributor to the main bank as well, because the idea is that UnionDigital will also serve a certain sector of open banking and open finance which we don’t see as of yet, or right now. But we’re hoping it will be a large one,” said Dizon-Go. UnionDigital is one of six banks licensed by the Bangko Sentral ng Pilipinas (BSP) in 2021 as a digital bank.

In terms of increasing its partners in the open finance marketplace, UnionBank is looking and continue to scout across sectors to find widely-used fintech services or e-wallets. These are third parties that have high usage by the general population.

“We’ve done this with the major e-wallets and the major e-commerce streams and we’re not stopping there. We’re also looking at doing the linkage with investment companies, for example – you want to buy stocks. We’re doing that and we’re allowing you to link your UnionBank account to stockbrokerages so you can also do investments online,” said Dizon-Go.

The BSP has set guidelines for both banks and non-banks to engage in the digital financial marketplace under the open finance environment.

The BSP’s Open Finance Framework is expected to further drive innovation in the financial sector where banks and e-money issuers (EMIs) are forging strategic and meaningful partnerships with other financial service providers to “empower consumers and enable them to access a range of select financial products and services through a one-stop-shop platform.”

The central bank describes a digital financial marketplace model as a platform-based business model enabled by ecosystem partnerships between a universal bank, commercial bank, digital bank, or EMI and other financial service providers where the latter may use the digital marketplace owned and operated by the bank or EMI in offering select products and services to bank or EMI clients, for a fee or commission.

The BSP wants open finance to accelerate financial inclusion by improving access to credit and improving the tools that micro, small and medium enterprises can tap. As defined by the BSP, open finance is the extension of data sharing principles, assigning greater control to customers over their own data and enabling them to allow third party providers access to their data across multiple financial products and services.