When Cantilan Bank (CANBNK) decided in January 2019, to rely fully on the cloud-based Software as a Service system, it became the first Bangko Sentral ng Pilipinas (BSP)-regulated bank in the country to do so. The shift, done with support from the Asian Development Bank (ADB), not only created new opportunities for doing business but also proved timely and fortuitous.
With the pandemic resulting in protracted lockdowns and quarantines starting in 2020, the bank found it doubly difficult to bring its services to clients, mainly farmers and fisherfolk, who seldom had access to reliable and consistent connectivity. CANBNK was often the only financial institution in the towns of 12 Mindanao provinces and Leyte where it operates. Mindanao, which has a high incidence of poverty, also has the highest concentration of the unbanked, unserved and unreached. How to bring them into the fold was the bank’s biggest challenge.
Fortunately, retired Gen. William Hotchkiss, a former Philippine Air Force commanding general who became the bank’s president and chair in 1997, brought to his job an openness to new technology which he had developed as a fighter pilot.
“In fighter flying, you have to stay ahead of the curve all the time and … be most technologically adept … [To] survive the competition, you have to be ahead with technology, be more efficient,” the career military officer said in “No One Left Behind,” the BSP book on financial inclusion, which has always been a goal for CANBNK.
The retired general decided that high technology was the way to do it, “while keeping in mind that you really have to cater to people in the countryside—the farmers and fishers—and encourage them to enter the banking system.” The strategy was “high tech, high touch,” or combining new technology with person-to-person service.
CANBNK considered the use of cloud technology to reduce the need for physical infrastructure in serving a widely dispersed clientele, many in hard-to-reach areas. Cloud computing allows information to be stored remotely in a “cloud,” or virtual space, with banking services delivered through the internet.
But could a rural bank afford the new technology?
Hotchkiss’ daughter, Tanya, executive director of Hotchkiss Foundation and head of strategic management at the bank, found a way to help. After learning about the ADB’s technical assistance program for the Philippines under the National Strategy for Financial Inclusion, she proposed using CANBNK for the pilot cloud project, which could then be the basis for scaling up a cloud-based core banking system. The late BSP Governor Nestor Espenilla approved the project.Cloud computing gave the bank greater flexibility and versatility. It also improved access by the underbanked and unbanked to a wider range of digital financial services. Technology allowed the bank to roll out digital interventions critical for survival, resilience and sustainability despite pandemic-related restrictions on mobility for both staff and clients.
“The cloud-based core banking system allowed seamless continuity of services to branches, including training and information technology support. Network availability and connectivity, meanwhile, were unaffected,” the bank said.
With clients able to access a wider range of services online, the bank expanded its offerings to include, among others, electronic or e-wallet, internal fund transfers, external fund transfers, utility and bill payments, airtime load top up for mobile phones and QR code payments.
“The cloud-based system proved indispensable for disaster recovery and business continuity during the pandemic and in the aftermath of [the 2021] Supertyphoon ‘Odette,’ (international name: Rai) a Category 5 storm,” the bank said. When Odette cut off power and connectivity in most Cantilan branches, the cloud-based core banking systems, cloud-based networks and cloud-based ATM systems enabled CANBNK to resume normal operations in a matter of days. Its clients managed to make lifesaving transactions, especially cash withdrawals to buy food, water, medicine and other necessities.
An ADB study showed that CANBNK’s pioneering project benefited the entire rural banking sector, and paved the way for 46 other BSP-regulated financial institutions to migrate to the cloud. INQ
