Finding the right mix: Innovation in financial services with RCBC 14 January 2022 127

Mr. Lito Villanueva is the Executive Vice President and Chief Innovation and Inclusion Officer at RCBC and the Founding Chairman, Fintech Alliance Philippines. With those roles, he was the perfect person to ask about innovative practices and what ensures success. He describes his simple formula that leads to transformational thinking. 

The role of innovator in banking is not an easy one - how do you personally approach the challenge? And how does your institution think about innovation with all of the existing challenges, threats, and legacies in the industry?

Digital transformation in banking is a process of deconstruction and reimagination.

Industry leaders, bank executives, innovators, and regulators must work synergistically as paragons of necessary transformation. They must be able to champion within their own institutions and across the industry a mentality that puts forward the “digital-first imperative.”

In my years of experience as a banking executive working in the Philippines and APAC, I have simplified this kind of transformational thinking into this simple formula: 4Ps + 3Vs = PDC.

The four Ps refer to people, process, platform and product, which all point to providing our clients a valuable and seamless customer journey. Our financial institutions must be able to thrive at a human-centric digital culture by putting the needs and demands of the customers first. This will then lead us to accelerate the improvement of our banking processes, investing in and employing new technologies when necessary. With frictionless and agile processes, our digital platforms sustain customer engagement without reliance on physical branches by delivering value-added products and services that directly address the needs and demands of our market.

This full circle and excellent customer journey must then be powered by the 3Vs referring to velocity, value, and volume.  Velocity requires that digital transformation efforts be done with speed and agility. Value in the products and services we offer is key to increase customer adoption and maintain loyalty. Volume refers to the extent of impact, growth, and scale of our digital innovations.

Being successful in these areas results in PDC which refers to profit maximization, data generation, and cost reduction. These key result areas are important to keep our digital innovations and transformation projects sustainable.


As financial institutions build their digital agenda, it is imperative they find the right mix between fintech cooperation, innovations labs, open programs and internal processes. How do you approach this in your institution? And how do you see this evolving in the coming years - will we see more innovation plugged into banks from the outside or innovation built from the inside? 

With the demands of migrating to a more digital-orientated scale of operations also comes the need to focus on technology and how we can explore its potential if we are to make our ventures future-proof. This is where the seemingly competing propositions of building or buying technological solutions enter the picture.

Some organizations and businesses would prefer to develop their own “tech” from the ground up. They are willing to make heavy investments, both in time and money, to come up with tech solutions that are highly customized based on the type of product or service they are offering to the public. Engineering an in-house tech solution, especially for banks, however, can be extremely daunting as not all financial institutions have the manpower and the expertise needed to develop and maintain one. 

Though the proposition of building an in-house fintech solution from scratch may give the bank “full control” of certain variables such as the time and the manner by which they can introduce new products and services, this will also require the bank to face the higher risks of maintaining and updating their in-house solution on their own.

This is why some financial institutions would rather lift the “tech” burden from their shoulders and instead tap onto vendors who can do the so-called “dirty work” for them. Buying a pre-existing fintech solution would definitely ease some of the constraints, especially in the monitoring and maintenance departments. However, this would also mean compromising on the customization of certain products and services that the bank may want to roll out for its clients and users. Since most of these solutions are “packaged”, product and service customization could be limited. Moreover, buying in to tech vendors may cost an exorbitant amount of money, making the initial investments too heavy.

Financial institutions can embrace either the build or the buy propositions. It’s a matter of studying what will work best for them considering their talent pool, financial resources, and tech needs.


There is a clear trend of fintech startups becoming the new digital tech providers for banks, replacing current tech suppliers. Do you see the same trend in your institution? How do you think IT departments need to evolve to accommodate this?

Fortunately, there are some fintech companies who are willing to provide their services to financial institutions in a more hybridized framework based on partnerships. 

According to an article in UK Finance, this hybrid setup “provides banks with the ability to lean on fintech specialists to provide a framework for banking and payments without needing to pull internal resources, re-staff, or pivot their strategies. Once the technology is integrated via APIs – thanks to the capabilities afforded through PSD2 – the bank gains full control of how to leverage that technology to innovate based on the needs of its customers.”

RCBC had a similar experience when it launched its first-ever financial inclusion super app called DiskarTech. RCBC partnered with NextBank and AWS to power its cloud-based core banking system and mobile banking solutions. We did this so that we can roll out the product at a much faster pace and so that we can readily be in the market at a time when Filipinos needed fintech solutions the most. 

From this partnership, we are able to build and iterate new services along the way that would address the specific needs of our target market and users who are mainly the unbanked and underserved Philippine population.

Moreover, the hybridized framework also enabled our IT department to perform ancillary roles that will ensure a frictionless customer experience. By lifting much of the product development burden from their shoulders, they are able to support our digital products on the backend in terms of operations, data mining, and analytics. 


Testing and piloting is one thing, bringing innovative solutions to market is far more complex. What is your experience and opinion based on how your institution delivers solutions? In your opinion, how can financial institutions succeed in bringing real innovation to the core business?

As I always say, product development is not the entirety of digital transformation and innovation. No matter how “savvy and sexy” your tech or product is, it will fall short if it does not directly address the needs and pain points of your customers.

I believe that at the heart of real, transformative innovation is customer centricity.

As our financial institutions embrace digital transformation, maintaining loyalty and establishing new client relationships is still a must. This has always been the strong suit of legacy banks. 

We have to remember that trust and loyalty remains the most important currency in the industry. In the midst of increasing competition, I believe that what sets apart “digitized” legacy banks from other players is their ability to harness customer loyalty and transform this into more accessible and efficient service. 

It means embracing a demand-driven proposition to deliver more personalized and customer-centric products and services. It means dissolving the barriers to inclusion whether by switching the language of the app interface to the vernacular or by simplifying the eKYC process. It means having that genuine desire to make the digital solutions work for every one so that no one is left behind. 

Customer centricity remains king even in the changing and digitalized financial landscape. Digital prowess and innovation must spell out empathy. 


In what areas do you think we will see the fastest innovation applied to mainstream services? Retail? Commercial? SME? Private Banking? And why?

Innovation, speed, and agility are key in any transformation journey. It is not function of the product nor a particular banking segment. It is a matter of understanding the existing needs of your market and anticipating their potential pain points.

Whether it is on retail, commercial, SME or any other segment of banking, an agile innovation means being able to focus on a market challenge and allowing the team to generate creative solutions to address it, at the quickest possible time.

In RCBC’s case, we were able to identify low levels of financial inclusion in the Philippines as a market challenge. Our response to this was the creation of DiskarTech, the first Tagalog and Cebuano financial inclusion app in the country.

RCBC’s DiskarTech, for example, has successfully scaled its customer acquisition, usage, and operations nationwide for a little more than a year since it was first launched in July 2020 at the height of the pandemic.

In 30 days from launch, we reached over a million app downloads. To date, DiskarTech has close to 5 million app downloads. In less than five months, we have a registered user in every province of the country. In less than a year, we have 9 out of 10 users who are in the provinces, and 70 percent are millennials and Gen Z.

And as of end-November 2021, DiskarTech has also booked a gross transaction value in excess of US$327.9 million (Php16.4 billion).

DiskarTech’s partner deposits also recorded a 39,933-percent and 8,992-percent surge in transaction value and volume, respectively. These cash-in and deposit transactions are being done in over 45,000 touchpoints nationwide that includes 7-Eleven, Bayad Center, Ayanah, rural banks, pawnshops, drugstores, and money service businesses, among others.

These figures show how RCBC’s mass-market app has been embraced by Filipinos nationwide, pointing to the reality that it has contributed massively to the country’s digitalization and financial inclusion efforts. What this means on the part of the end users is that the products, services, and solutions offered by the app works well to meet their needs. It means our users and clients have placed value and trust on the innovation we offered to them because they have seen how the app responded to their needs and demands. 

Join Lito Villanueva and his peers in charge of innovation at financial institutions. Contact Dorota at dorota@efma.com to become a member of the Efma Future Innovation community or join directly through the community webpage.





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