Isabelle Yap is a senior assistant vice president, special-projects officer, and executive director at EastWest Bank. As a former consultant at McKinsey, she has experience in serving multiple clients across the Philippine region, and she was part of the Management Associate program at Singtel, one of Asia’s leading telcos. A digital native, Yap brings in new perspectives and new ways of engaging with customers. She helped spearhead the launch of Komo, a digital banking service under EastWest Bank, and serves as chair for f(dev), the digital-venture builder and innovation factory of Filinvest Development. She recently spoke with McKinsey about the rise of banking in the digital age, support for small and medium-size enterprises (SMEs) through loans, and the critical but often-overlooked topic of cybersecurity. This conversation is part of the broader Philippines Growth Dialogues interview anthology, which explores the opportunities and challenges to future-proof the country's next horizon of growth and innovation. An edited version of the discussion follows.
Banking for the digital age
McKinsey: Have there been recent developments in the banking industry that excite you?
Isabelle Yap: I believe the outlook for the Philippines is very bright. In Southeast Asia, the average age is about 24, and that’s the youngest in the region. If you couple that with an increased rate of consumption, we will see that these young consumers will fuel the economy moving forward. There’s a lot of components and drivers that continue to grow, which will ensure Philippines’ trajectory in having a bright future.
A big trend that we’ve been seeing is the rise of digital banking in the Philippines. One interesting development was entries by multiple entrants in the digital-banking space. And that is something relatively new in the country. The other emergence we’ve seen is the rise of fintech players, particularly wallets, payments, and gateways. These types of entries put a lot of pressure on Philippine banks today. It prompts traditional banks to rethink: “What is our value proposition to our customers? How can we constantly update and keep our products and services fresh to best serve our customers?”
[The rise of digital banking] prompts traditional banks to rethink: 'What is our value proposition to our customers? How can we constantly update and keep our products and services fresh to best serve our customers?'
Unlocking growth in small and medium-size enterprises
McKinsey: What should be the role of banks in helping SMEs take advantage of global opportunities?
Isabelle Yap: A critical enabler would be for banks to extend loans to SMEs to enable them to grow their products and services and eventually become successful businesses. There are, however, challenges in the underwriting of these SMEs due to a lack of data and the potential instability in their businesses. But I think this is a great source for banks to obtain data. This would allow financial institutions to formulate a scorecard that could help manage future potential risks and to acquire the data to learn more about the nature of these businesses over time.
For this to be implemented, banks need to build a model to sustainably issue these lending services to SMEs. This access to loans will uplift not only SMEs but the Filipino consumer, as well, by extending personal loans—unsecured or secured. Microlending to SMEs will equip them with the levers and the opportunities to grow their businesses, as well as help uplift the Filipino economy as a whole.
Applying a customer-centric approach to cybersecurity
McKinsey: How should banks invest to cope with the rising threat of cybercrimes?
Isabelle Yap: Banks are always at risk of cyberattacks because of the nature of the data and the information that they hold. Banks need to continue to invest in information security, whether it’s technologies or tools to be able to protect themselves from cyberattacks.
Apart from this, they also need to constantly update their information-security programs. This includes awareness programs for employees and investments in the human capital who constantly update these policies. The problem is that technology in this area evolves quite quickly, and so banks need to keep step with the changes, especially with security matters. Investing in cybersecurity protects not only the banks themselves but their customers.
Investing in cybersecurity protects not only the banks themselves but their customers.
Comments and opinions expressed by interviewees are their own and do not represent or reflect the opinions, policies, or positions of McKinsey & Company or have its endorsement.
