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Philippines’ PBCOM reimagines retail banking

The bank is leveraging Temenos tech to target retail customers previously out of reach, says COO John Medina.



John Medina, PBCOM

Many tech companies in Southeast Asia, from e-commerce platforms to transportation apps, are trying to be more like banks, or even get licensed. But the opposite is happening too. In the Philippines, local lender Philippine Bank of Communications is launching a mobile capability to become more like a tech company in its approach to winning new customers.

The ambition goes beyond just having a mobile banking presence, says COO John Medina. It’s about finding a way to embed the bank in the lives of customers of PBCOM’s corporate affiliates.

PBCOM has roots that go back to 1939 when it was set up by China’s (pre-Revolution) Bank of Communications. It has changed hands several times since then, until it was acquired in 2014 by Lucio and Susan Co.

The billionaire Co family is best known for Puregold, a grocery chain that got its start in as a duty-free shop at Clark, after the government turfed out the American Air Force from its base there in the early 1990s. The supermarket chain is now one of the country’s biggest.

As a wave of ride-hailing and e-commerce companies have taken hold throughout Southeast Asia, it seems Lucio Co was thinking about what that meant for traditional grocery stores – and how he could leverage his bank to provide the sort of offering that could thrive in the digital era.

Core banking upgrade

First, the bank needed to update its core capabilities.

John Medina, a veteran banker from Philippines National Bank, joined in 2017 as chief operating officer. He inherited a banking system provided by Temenos. After consulting with the vendor, he decided to upgrade in line with Temenos’s new software offerings.

By 2019 PBCOM had gone live with Transact, a software-as-a-service platform from Temenos that allowed it to quickly launch digital banking services. PBCOM already had traditional and online banking, but purely digital products enabled it to develop a different kind of experience.

This was a steppingstone to PBCOM’s launch of a fully mobile banking service, based on Temenos’s SaaS. But to get there required more than just adapting the tech for a different kind of screen.

“We have moved all of our new initiatives to the cloud,” Medina said. “There’s no longer an intermediary between the customer and the core banking system. This means anyone can download the app, get onboarded, and start transacting within seconds – if they pass the validation process.”


The mobile-only version launched during the COVID-19 pandemic. “This let us reach out to prospective customers who couldn’t visit a branch,” Medina said, adding the bank would courier debit cards to new joiners. Debit cards and real-time interbank transfers were key to allowing people to make e-commerce payments.

“The stumbling block is that the Philippines is a cash economy,” Medina said. “People can’t fund their e-commerce account if they don’t have a bank account.”

The platform also encouraged customer feedback, turning users into a source of ideas. PBCOM found both customers and companies wanted to shift payroll to mobile accounts, for example.

The bank has also taken a page out of the WeChat playbook. Similarly to lai see in Chinese culture, It’s a Christmas tradition in the Philippines to give people money, called “aguinaldo”. Under COVID lockdowns, several companies digitized aguinaldo, including PBCOM and rival PNB, and of course fintechs like GCash and PayMaya.

With bonus money for referrals, the digital gifting helped boost user numbers, although Medina declined to quantify these. He says only about 25 percent of the mobile users are original bank customers.

Integrating with retail outlets

PBCOM has also begun to deepen its ties to the Co empire’s retail outlets. The bank already began to handle corporate payments for grocery stores. But the launch of its mobile app during COVID created a way to build relationships directly with retail customers.

Because people were not visiting bank branches during the pandemic lockdown, PBCOM shifted the branch to the people: it set up kiosks or even shifted entire branches into other retail outlets, where people will soon be able to use the mobile app to transact via cashiers.

“People may not need to visit a branch, but they need groceries,” Medina said.

Moving to cloud makes this possible. “Cloud is key to interoperability,” he said. “We can expose APIs and let customers plug in. Business can can shift to direct deposits for their employees by getting them to self-onboard via the app.”

Now the bank is racing to deepen these connections. It can reach not only shoppers but the sari-sari class, the mom-and-pop shopkeepers that operate stalls inside bigger grocery stores. This is a category of micro businesses that a traditional bank could never afford to chase. Now with digital technology plus a foot in the physical retail space, PBCOM can go after those customers.

Of course, many other banks and fintechs are doing the same thing. The central bank has laid out rules insisting banks, fintechs and mobile wallets connect. This has changed the nature of competition from building captive audiences to competing on services.

Competing on servicing small merchants

PBCOM is experimenting with a number of local fintechs on things like bill payments, telecom top-ups, and toll payments for drivers. Temenos Transact is the basis for the bank’s ability to interact with these third parties.

“We’ve worked out a roadmap with Temenos that syncs our strategies. We want a long-term relationship, but one that lets us jumpstart new initiatives instead of having to wait for a total upgrade to the core system,” Medina said.

Jean-Paul Mergeai, president for Asia Pacific, the Middle East and Africa at Temenos, said, “Temenos SaaS provides the perfect launchpad for new retail services to be fast, efficient, and competitive, enabling banks like PBCOM to take their place in the new banking landscape, fast.”

This tech backbone is allowing PBCOM to reposition itself as a gatekeeper to Lucio Co’s retail customer base. “Supermarkets are wholesale distributors,” Medina said. “Large conglomerates can reach the moms and pops. That’s the direction we’re headed.”

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