In the heart of Hungary, an unexpected partnership is taking root, set to redefine the global remittance landscape. Hungary’s Peak and the Philippines’ RCBC have forged an alliance. Their goal? Crafting a groundbreaking digital remittance solution tailored for Filipino workers in Hungary. In this interview, we delve deep into this collaboration with RCBC’s Lito Villanueva, a luminary in the digital banking and fintech space.
Remittances constitute a market with great opportunities, but also considerable challenges. Just these past couple of weeks, major fintech players have introduced new products and collaborations in the space. Revolut has pulled the veils off RevTag, while Wise has struck a partnership with Swift.
This time, however, it is not only the international superstars innovating. Peak, the Hungarian one-stop fintech provider and RCBC, the Philippines’ best bank for digital have joined forces to create a digital remittance solution of their own. We sat down with Lito Villanueva from RCBC last week during his stay in Budapest to talk about the project in more detail.
Lito Villanueva is the Executive Vice President and Chief Innovation and Inclusion Officer for RCBC and concurrently is the Chief Digital Transformation Advisor for the Yuchengco Group of Companies, one of the oldest conglomerates in Asia. He was regarded as the “Mr. FinTech of the Philippines” by NewBiz Asia and awarded as Digital Leader of the Year, among other regional and global accolades. He is also the Founding Chairman of Fintech Alliance.Ph, an organization responsible for over 95% of fintech-initiated transaction volume in the country, as well as the global chairman of the South Africa-based Alliance of Digital Finance Associations with over 30 member countries. His further achievements and positions make him the Philippines’ leading and award-winning thought leader on digital transformation and inclusive digital finance. RCBC is the 5th largest privately-owned universal bank in the Philippines. It is the fastest-growing domestic bank in the country due to its fintech-like approach in the banking sector. The bank has earned numerous awards throughout the years for its digital solutions, innovative initiatives, and excellent customer service from the likes of Gartner, Asiamoney, The Asian Banker, Retail Banker International, and even Youtube.
A very warm welcome to Budapest. Can you tell us what brought you here?
Absolutely. First of all, it is a fantastic experience to visit Budapest. The primary reason for our journey here is to establish a collaboration for a trailblazing initiative that will benefit current and future Filipino workers in Hungary, as well as their families back in the Philippines.
Could you expand on this collaboration?
We are teaming up with Peak to create a digital solution that can facilitate reliable, efficient, and cost-effective money transfers between the two countries. We are working on a service that has international money transfers at its core, with a wide range of further financial services built around them – creating an ecosystem play.
How has this partnership come about between Peak and RCBC?
All credit goes to the Hungarian Ambassador to the Philippines, Her Excellency Titanilla Tóth for bringing us together. It could not have come at a more opportune time given the celebration of the 50th anniversary of diplomatic relations between Hungary and the Philippines happening this month.
I am also delighted to have met the Deputy State Secretary Katalin Bihari of the Ministry of Foreign Affairs and Trade in Budapest who also expressed the Hungarian government’s support to this great initiative.
Circling back, after the initial contacts, we have found it easy to align our vision and purpose. Practically, RCBC has the mindset of a fintech startup with speed and scale at its core. Digitalization is in our DNA: we are not afraid to move quickly and innovate.
So, what is public for the time being: what will the finished product look like?
We are working on probably a global first embedded finance-enabled digital banking ecosystem initiative that will allow Filipino workers in Hungary to send money to their families back in the Philippines. It will be supplemented by a whole slew of financial services, such as savings, investments, insurance, and lending just to name a few. Customers will be able to sign up even before they leave the Philippines so that they are ready for their life in Hungary in terms of their finances. The offering will not only be available to the customers, but it will also benefit all members of their family.
What value do you bring to the market?
There are various areas where we can come in and make an impact. Purely from a product standpoint, we are bringing in several benefits, creating substantial value. Besides the product side, we are providing digital financial services not only to Overseas Filipino Workers but to their families as well. We are harnessing family dynamics in order to extend the reach of our bank within the population – a significant part of which has difficulty accessing financial solutions. We supplement our products with educational campaigns as well.
One important part of my business trip here was to meet with Filipinos currently working here in Hungary. It was a great experience to talk to them and hear their stories. Our initiative is based on their inputs making our product a customer-centric and data-driven financial service, which further strengthens our value proposition. All in all, we are looking at commercial success via digitalization, financial inclusion, and financial education; and we are creating value along the way for individuals and society as well.
The Philippines is aiming to become a digital powerhouse. It is expected to grow to a one trillion dollar economy by 2033 according to the S&P Global Market Intelligence Report. Digitalization and financial inclusion play a key part in achieving this forecast. Digital payments are expected to represent 50% of all retail transactions and at least 70% of the population is expected to be integrated into the formal financial system by the end of 2023. These are huge milestones expected to be met early, in two areas where the country had been lacking in the past.
How does the envisioned product fit into the current remittance market?
The Philippines has the world’s fourth highest inflow of remittances – they contribute about 10% to our economic growth year over year. As such, remittances are the economic lifeblood of our country. Regarding our impact, the main commodity we can offer our customers is trust. Filipinos can trust us all around the world with security only banks can provide. Also, a lot of remittance services rely heavily on physical touchpoints. By going digital, we are also leaving a mark and helping them enjoy the benefits of technological advancements.
Have you set any goals you wish to reach?
We have big aspirations. We want to be the leader in this particular space, serving our fellow Filipinos who are working in various parts of the world. Leaders in terms of product quality, market share, and brand love. In the process, we want to give some well-needed support to Filipino workers. At the end of the day, they are leaving their families and traveling abroad to work, to provide economic stability for their loved ones. But they will not work overseas forever. As part of our ecosystem approach, we aim to equip them with all the necessary financial and digital knowledge and tools, that can help them and those around them for a lifetime.
In terms of practicalities, what exactly do you hope to achieve during your stay?
We want to go to market as soon as possible – and we seem to have found the perfect partner in Peak. Both parties are on the same wavelength and energy level, we both speak the same language of fintech-like innovation and execution. We are in the process of clarifying some details, and once that is done, we are ready to take the next steps.
Can you speak about what the next steps are going forward?
Definitely. We are set to sign a Memorandum of Understanding in Manila before the end of the month. Phase one of the pilot could go live in the first quarter of next year. In the three months following, we hope to implement phase two, which would still entail a limited offering. However, by the second quarter of next year, we should have launched fully and realized our full vision of the collaboration.
And do you have any long-term goals beyond this three-quarter plan presented?
Yes, of course. There is no limit with regard to the possibilities. Firstly, there are Filipinos working all over the world, who we can also help. Once we have tested the waters in Hungary, we will quickly expand to other key European markets.
Secondly, once we have unlocked the huge potential of this collaboration, there’s still so much we can do between the two of us. We love to innovate, and I can see us leveraging technology to do even more for the common good of society.
