Stuck in analog: Only 20% of rural banks ready for digital
Only one in five thrift and rural banks, as well as microfinance institutions and cooperatives, are ready to digitalize their operations.
According to an Inclusive Digital Finance (IDF) report titled, “Are Philippine Financial Institutions Ready for DX? A Baseline Study”, 80 percent of the institutions that participated in the survey have “limited” or “minimal” capacity to digitalize their systems and processes.
The report showed that more than half of the respondents, or about 57 percent, are so-called “digital laggards” after getting scores of 40 and below in the commitment, awareness, readiness, adaptability (CARA) index, which has a perfect score of 100 percent.
Of the total respondents, 24 percent are “pack followers”, or those with scores between 41 and 60, and only 18 percent are “path breakers”, with scores of 61 and above. “The biggest barrier to their adoption is their willingness to invest in digital technologies,” FINTQnologies Corp. (FINTQ) managing director, Lito Villanueva, said in a press briefing Thursday.
Villanueva said willingness to invest in digital technologies is a big part in having a high CARA score because the “readiness quotient heavily influences the bank’s level of commitment quotient.”
He thus raised the need for greater cooperation among industry players to put in place the necessary policies and implement programs that cover not just banks, but people and platforms as well. “A one-size fits-all approach is never going to work,” he said. “Digital laggards require the most foundational technologies before undergoing full DX (digital transformation).”
Villanueva said pack followers “need to exploit big data to arrive at informed decisions” while they improve policies and customer experience. “With the right support, path breakers could delve into the core functions of DX, such as omnichannel delivery or open banking,” he added.
The online survey was done from Aug. 23 to Sept. 25 this year and was participated in by 76 chief executives and/or presidents of banks and non-bank financial institutions that are members of the Chamber of Thrift Banks, Rural Bankers Association of the Philippines, and the Microfinance Council of the Philippines. (PNA)