Banking through the mobile
phone with BanKO
Talk about branches yielding to online banking, BPI Globe BanKO, a savings bank owned by the Ayala Group of Companies and Globe Telecoms, offers an unorthodox banking experience.
The bank prides itself for being the first and only bank in the Philippines that operates through the mobile phone.
According to Alejandro Almendral, BPI Globe BanKo’s assistant vice president, the goal of the bank is to automate the banking system.
"We want to bring the bank closer to the unbanked," he said.
He said the bank is trying to give the best options for the unbanked sector especially to those who were intimidated by the brand names of banks.
Almendral said that members of this unbanked sector are mostly those who are in the far flung areas of the provinces or the small earning citizens of the community.
"They would rather keep the money than go to a bank and not be entertained," he said.
The banking system of BanKo works electronically.
The bank has partner outlets which they call BanKo Partner Outlet or BPO’s.
These BPO’s processes the transactions and applications, while approvals were processed in the branches, for the bank for a fraction of payment in every transaction.
The BPO’s are being paid depending on the volume of transaction it can process in a day. Every Transaction has a corresponding amount.
According to Almendral, BPO’s get P10 for every application forms processed in their out lets.
"Of course, the outlets don’t do it for free. This is also our way of helping our outlets make a profit out of the venture," he said.
To be qualified as a BPO, the applicant must have an existing business and available fund worth P40,000- 50 percent electronic money and 50 percent cash.
According to Almendral, setting up a BPO alone is not enough to generate income to support daily living expenses.
A BPO earns for every cash in- the term used by the bank to refer to deposit and cash out- the term used by the bank to refer to withdrawal.
Almendral said for every cash in, the BPO earns P1.25 for P50-499 deposit and P7.50 for every cash out worth P50-499.
"The amount to be paid by the depositor to do a transaction increases as the amount they cash-in or cash out also rises," he said.
According to him, the reason behind the scaling of the cost is to make sure that the goal of the bank is met and it is servicing its target market.
He also said that BPO outlets are in areas that can be considered as not rich communities but not depressed as well.
Since BanKo is a savings bank, it encourages its depositors to save more money and do less withdrawal, this is also the reason why cash-out at BPO’s are more expensive than cash-in.
Because of this, the bank offers its depositors an option when it comes to savings.
There are two savings product which the clients can choose from: first is the savings account that has a three percent per year interest rate and second is the savings account that has a one percent per yearinterest rate but comes with a free life insurance coverage.
According to Almendral, the options are given because most of the BanKo depositors wants insurance for their loved ones.
"Most of our depositors go for the savings with insurance," he said.
He explained that since these people are not on the upper bracket of the society, they cannot afford expensive premiums, but like anybody else they need the insurance.
To date, the bank has 20 thousand depositors from different areas in the country.
The banks savings account that is coupled with life insurance covers five times of the depositors average daily balance for the last six months.
However, only clients that has a n average daily balance of P2,000 will be covered by the insurance.
The pay out will be given with in ten days from the date of completion of the requirements.
"The family members need not go to the bank’s branch to get the money,they only have to open an account with us and the insurance proceeds will be deposited to the account directly," Almendral explained.
The bank requires an initial deposit of P100 to open a savings account. The depositors however, need not go a now, branch to open one.
Since BanKo has several outlets, interested parties may open an account with BPO’s.
"They only need to present an ID, a baranggay certificate at the least, and accomplish a form," Almendral said.
The BPO’s will process the request and the depositors will get their atm card on the same day.
After the registration with the BPO, the client will receive a text message saying that an initial deposit of x amount have been placed under the depositors account.
The depositors will have to register a mobile personal identification number that will serve as his password in the banking system.
"The depositor will have to dial *118*1# on their mobile and the menu will show on their mobile phones," he said.
Almendral said the bank subsidizes the premiums for the one percent savings account free life insurance.
The bank pays P0.00167 for whatever amount on the average daily balance.
But will no longer insure amounts that are larger than P40,000.
"If they have P40,000, they are not our target clients, but then again, you cannot avoid them," he said.
To date, the bank covers 2,000 accounts.
Also, insurance is available for three percent savings account holders. The bank offers a voluntary life insurance product at P1 per day or P360 per year.
The insurance is one time pay product that can also be bought through the depositors mobile phone and registered Globe and Touch Mobile sim numbers.
Accoridng to Almendral, the voluntary insurance product covers P5000 for flooding and P2,500 for fire accidents.
The bank is currently pushing for a non-life insurance together with BPIMS- the bank’s insurance provider.
"We just completed the last set of requirements to get an approval to sell non-life insurance," Almendral said.
Almendral said, all insurance products offered at Globe BanKo are exclusive to the bank, this means that BPIMS cannot sell these products to their clients.
To date, the bank has 20,000 clients and it plans to expand its client base to a million for 2012.
According to Almendral, the bank is still setting up its infrastructure like BPO’s and branches.
But he is confident that the bank can grow as much considering the pick up of transaction volumes coming from the BPO’s nationwide.
The bank plans to open five more branches this year to add up to its six branches at the moment.
He also said that its partnership with Tambunting Pawnshops is helping the bank get the market visibility that it needs.
"We put tarpaulins on all Tambunting Pawnshops in the country," he said.
BPI Globe BanKo for the farmers
The bank recently announced its intentions to extend its banking arm to the farmers through its banking and lending products.
Lance Gerard Ledesma, assistant manager of BanKo, said the "product is a savings account in nature", the development of which is part of the bank’s thrust to reach out to the unbanked sector.
"Eventually, these depositors will be our lending clients," he continued.
The product is designed in such a way that farmers of different commodities will open a savings account with the bank and eventually become the bank’s loan clients.
This means that the bank will reach out to farmers individually like all retail banks do.
The bank aims to create a link between farmers and banks through the mobile phone.
The farmers can get a loan from BanKo by opening a savings account.
After the account has been made, farmers who have an average daily balance of P2,000 can request for a loan that is equivalent to 100 percent of their deposit.
To date, the bank has an outstanding loan portfolio that is worth P2 billion pesos.
These loans are on a wholesale lending process whereby micro-financial institutions borrow money from the bank and disseminate the fund to members who wish to avail themselves of a loan.
From an initial paid-up capital of P350 million, BanKo’s capital is now P1 billion. With just four partners when it opened in September, BangKo now has 180 teams that are actively looking for partner outlets where clients can transact their banking needs.
BanKo was established in 2008 as the first microfinance-focused bank that has a business platform based on corporate social responsibility.
The bank uses the mobile platform of its telecommunications network partner Globe Telecoms.
This means that all banking products of BPI Globe BanKo are available on the depositor’s fingertips.
Globe BanKo is the first savings bank in the country that uses the mobile platform.