BancNet, the largest automated teller machine (ATM) consortium in the Philippines has shown a stellar performance despite the pandemic and will introduce new digital service next year, as the economy improves.

BancNet, the first multi-bank, multi-channel electronic payment network in the country is led by its newly appointed President Fabian Dee, who is concurrently the president of Metrobank. Dee succeeds Cezar Consing of BPI who has retired after serving three terms.

Dee said GDP is expected to rebound by 5.5 percent from the 9.6 percent decline in 2020. Hopefully, the economy should recover back to pre-Covid levels by 2022, but such recovery will depend on how the progress of the nationwide vaccination program and easing of quarantine restrictions play out.

'With the Corporate Recovery and Tax Incentives for Enterprises (Create) law, the lower tax rate should provide the much-needed relief to corporations and will help spur economic recovery. Finally, the Financial Institutions Strategic Transfer (FIST) law is viewed as a positive break to the banking sector as this will facilitate transfer of non-performing assets to third parties, hence easing burden of non-performing loans (NPLs) on capital and improving the bank's ability to lend,' he said.

Dee said for the whole industry basically, the favorable trading results that came out last year were attributed largely to the 200 basis points (bps) drop in interest rates as the Bangko Sentral ng Pilipinas (BSP) loosened monetary policy to support the economy and enabled most players in the industry to realize trading gains.

'The BSP cut key policy rates by a total of 200 basis points and deployed regulatory relief measures to complement fiscal stimulus and help stimulate the domestic economy. Risk appetite was the key driver of the USD well into the end of 2020. Demand for the USD as a safe haven declined amid improving global market risk appetite especially for emerging market assets. The Philippine peso made strong gains and remained within the P48 level from the P50.69 close at the start of the year. The peso was even hailed as Asia's best performing currency last year,' according to Metrobank 2020 economic performance report.



Maintaining a high switch availability rate of 99.98%

BancNet's resilience and reliability during pandemic year 2020, was its most notable achievement, according to Consing.

'We activated our business continuity plans to enable us to work safely and continuously, cope with the expected volume surge and manage our operations at a time when people needed our service the most. We knew that it was a time when we could not afford to be unavailable,' he said.

BancNet posted strong operating and financial results that enabled the company to reduce its unit cost per transaction while maintaining a high switch availability rate of 99.98 percent BancNet in partnership with Mastercard built a world-class infrastructure for real-time payments using the state-of-the art Vocalink technology. 'This technology will propel the next stages of digitalization in the country. New digital services will be rolled out in 2022,' he added.

Sustaining growth in cashless payments in 2021

The Covid -19 pandemic has accelerated the digitalization of payments in 2020. With the community quarantines imposed by the government, limited mobility and risk of getting sick, people turned to cashless payments and fund transfers.

'Customers preferred to go cashless in their payments and we see this trend to continue in the 'new normal' because people have seen the value and experienced the convenience of cashless payments,' said BancNet Chief Executive Officer Aristeo Zafra Jr.

Overall, cashless payments processed by BancNet in 2020 more than tripled compared to the volume in 2019. InstaPay, a real-time fund transfer service between different banks or e-wallets, grew the most.

Transactions surged from 32.2 million in 2019 to 218.3 million in 2020, up 186 million or 577.7 percent. InstaPay is available on the mobile banking apps or internet banking sites of 52 banks and electronic money issuers.

From August to September 2020, InstaPay transactions even surpassed the volume of interbank ATM cash withdrawals by one million transactions each month.

InstaPay reached a total of 54.65 million transactions from January to February 2021, 372.23 percent higher compared to 11.57 million in the same period in 2020. Despite purchases being largely limited to essentials, payments through point-of-sale (POS) terminals at stores and restaurants rose to 87.3 million transactions from just 75.5 million in 2019, an increase of 11.8 million, or 15.65 percent.

When paying through a POS terminal, a customer's payment is electronically deducted from his bank account in real-time. There were 442, 100 POS terminals across the country in 2020, 45.2 percent more than the number in 2019 as banks deployed 137, 615 more terminals.

In the first two months of this year, payments for purchases through POS machines increased by 9.19 percent to more than 15 million, compared to 13.77 million in the same period last year.

Cashless payment of utility, credit card, mobile phone, insurance and other bills also increased to 13.1 million switched transactions in 2020 from 7.2 million in 2019, a growth of 5.8 million transactions, or 80.26 percent. The bulk of bill payments were transacted on mobile banking apps (61 percent) and Internet banking sites (22 percent).

Bill payments processed by BancNet nearly doubled in the first two months to a total of 2.84 million compared to only 1.49 million in the same period last year.

'Electronic and digital bill payments eliminate the need to withdraw cash, the risk of carrying large amounts of cash, and the hassle of queueing at payment centers. More than 90 businesses and institutions can be paid through various bank channels and e-wallets,' BancNet said.

BancNet passes global PCI DSS tests

BancNet received its certificate of compliance after passing the assessment for the Payment card industry data security standard (PCIDSS) version 3.2.1. The certificate of full compliance was issued by ControlCase, LLC, a U.S.-based Qualified Security Assessor Company (QSAC) certified by the PCI Security Standards Council.



PCI DSS is a global data security standard used by all major card brands, including American Express, Discovery Network, JCB, Mastercard Worldwide, VISA International, and VISA USA. Full compliance with PCI DSS version 3.2.1 is the latest measure undertaken by the banking consortium to protect its members' and international partner networks' cardholders from fraud and other malicious activities.

The PCI DSS assessment covered payment processing through electronic channels which are the ATMs, point of sale terminal (POS) terminals, and the BancNet Online payment gateway.

Payment processing includes payments and fund transfers through instaPay, a real-time fund transfer service operated by BancNet. Its transaction processing switch and clearing and settlement system also underwent review and passed the rigid tests. The assessment was completed on October 25, 2020.



BancNet is the first multi-channel payment network in the Philippines to be certified PCI DSS compliant and has been certified compliant with previous versions since 2014.

The PCI DSS was developed to encourage and enhance cardholder data security and facilitate the broad adoption of consistent data security measures globally. It aims to build and maintain a secure network, to protect cardholder data, to maintain a vulnerability management program, to implement strong access measures, to regularly monitor and test networks, and to maintain an information security policy.

'With this certification, cardholders of our members and partners are assured that their account and transaction data that pass through our network are securely processed in accordance with strict global standards,' Zafra said.

Currently, BancNet has 123 members, consisting of banks, cooperatives, electronic money issuers, affiliate switch networks, and independent ATM deployers with a nationwide network that spans more than 21,000 ATMs and over 280,000 POS terminals.

Newly-appointed BancNet officials

Dee, 58 years-old was recently elected president of BancNet for the term 2021 to 2022. He became president of Metrobank in 2012. Prior to his appointment, he headed the National Branch Banking Sector (2006-2012), Account Management Group (2002-2006) and Marketing Center (2001-2002).

He has been the director of Bankers Association of the Philippines (BAP) since 2014 and trustee of Metrobank Foundation, Inc. (MBFI) since 2012. He was the chairman and director of Metrobank Card Corporation (MCC) from 2006 to January 2020; chairman of Metro Remittance Singapore PTE Ltd. from 2010 to 2019; chairman of LGU Guarantee Corporation from 2017 to 2019; chairman of SMBC Metro Investment Corporation (SMBC Metro) from 2014 to 2017; and director of BancNet from 2015 to 2017.



Dee, holds a degree in Management Engineering from the Ateneo de Manila University.

BancNet shareholders also elected 15 members of their board of directors for the term 2021-2022 during their annual stockholders' meeting on April 16, 2021.

The new directors are: Henry Bremridge, COO of Hong Kong and Shanghai Banking Corporation (HSBC); Manish Chawla, director and operations and technology head of Citibank; Renato Claravall, president and COO of Veterans Bank; Dee, president of Metrobank; Emmanuel Herbosa, president and CEO of Development Bank of the Philippines (DBP); Jaime Laya, president of Philtrust; Jose Teodoro Limcaoco, president and CEO of Bank of the Philippine Islands (BPI); John Howard Medina, COO of Philippine Bank of Communications (PBCOM); Jose Arnulfo Veloso, president and CEO of Philippine National Bank (PNB); and Sanjiv Vohra, president and CEO of Security Bank.

Re-elected were Eugene Acevedo, president and CEO of Rizal Commercial Banking Corporation (RCBC); Edwin Bautista, president and CEO of Union Bank; Cecillia Borromeo, president and CEO of Land Bank; Nestor Tan, president and CEO of BDO; and William Whang, president of China Bank.

The Board re-elected Nestor Tan as chairman and elected Dee as president and Jose Arnulfo Veloso as treasurer.

The Board also appointed key officers of the company: Aristeo Zafra Jr., CEO until June 30, 2021; Elmarie Reyes, deputy CEO until June 30, 2021 and CEO effective July 1, 2021; Marie Fe Liza Jayme, assistant treasurer; and Agnes Maranan, corporate secretary.

The board also appointed the members of the Operations Committee which is responsible for translating Board-defined policies into detailed operating policies and procedures. They are: Jose Luis Alcuaz (HSBC), Antonia Bacabac (Veterans Bank), Dennis Bancod (RCBC), Roberto Blas (Citibank), Allan Bornas (Land Bank), George Castro (Philtrust), Marie Carolina Chua (China Bank), Expedito Garcia, Jr. (PBCom), George Inocencio (DBP), Marie Fe Liza S. Jayme (PNB), Michael Magbanua (Union Bank), Tomas Victor Mendoza (BDO), Noel Santiago (BPI), Roseann Tan (Metrobank), and Daniel Yu (Security Bank).

2020 was a challenging year

The economy was greatly impacted by the Covid-19 pandemic, as businesses shut down due to lockdowns imposed by the government.

Several stimulus packages aimed at helping the highly-vulnerable sectors were allocated by the national government. BSP slashed key policy rates by a total of 200 basis points and deployed regulatory relief measures to complement fiscal stimulus and help stimulate the economy.

'Domestic interest rates remained low throughout 2020 on ample liquidity condition, benign inflation expectations, and subsequent policy rate cuts from the US Federal Reserve and the BSP. Central banks in almost all of the countries adopted a loose monetary policy stance to support their own economies. The Fed slashed the federal funds rate to near zero in March and has been buying about $120 billion in government-backed debt every month,' Metrobank said.

It added that near-term outlook for the global economy remains highly uncertain amid the renewed infection waves and new variants of the coronavirus. Nevertheless, a likely softening in the first half of] 2021 is seen to usher in a recovery in the second half as the roll-out of vaccination programs in different countries gain pace. The unprecedented policy support by governments is seen to continue and will become more targeted and flexible so as to adapt to fast changing conditions.

'For the Philippine economy, support will still largely come from the national government and the BSP. A return of consumer confidence - or the confidence of consumers to once again do both discretionary and non-discretionary spending - will play a large role in the economic recovery because fundamentally, consumer spending is what drives the economic engines of the Philippines,' the bank said.