In today's rapidly evolving digital landscape, the banking industry finds itself at a crossroads, bound for a future defined by innovation and technological advancement. As the President and CEO of Union Bank of the Philippines, I would like to share our remarkable journey toward becoming the foremost digital bank in the Philippines. Our digital transformation story is a testament to our unwavering commitment to innovation, adaptability, and the pivotal role of strategic partnerships, particularly with Huawei, in navigating this new landscape.
Our transformation journey began in 2016, with a stark warning from a financial consultant echoing in our boardroom: "Digitize or perish." At that pivotal moment, I had just assumed the role of CEO, and the gravity of this message was both straightforward and intimidating. We realized that inaction was not an option; we had to act decisively to remain relevant.
To chart our course, we summoned futurists, consultants, and thought leaders from diverse corners of the globe, including luminaries such as Thomas Frey from Google and the acclaimed author of Bank 3.0, Brett King. Their insights painted a vivid picture of the digital disruption that was already underway. The urgency of the situation became undeniable, and we knew we had to act quickly.
Our transformation was anchored in a vision of the future, where customer experience would reign supreme. Through continuous review, this vision crystallized into a five-phase plan that would serve as our roadmap to digital transformation.
The initial phase, which took place between 2016 and 2018, involved the agile transformation of our entire bank. We recognized that the future of lending and banking would be profoundly contextual. In essence, lending decisions would made based on the specifics of each transaction. For businesses, it would be the supply chain, and for individual transactions, we foresaw contextual lending again prevailing, centering around the point of purchase, whether pre-programmed or on-demand by the customer.
Given this scenario, we needed to construct an enterprise architecture capable of surviving amidst these changes. I say survive because fintech companies were already knocking on our doors, saying that banks would be too slow to cope. We refused to allow that happen, so we pursued our strategy of ensuring digital transformation at our core.
In the first three years after we had made the decision to transform, nothing much happened. Frankly, I was scared that I had asked the board to make huge investments with little payout as our number of customers and cost-per-transaction remained the same. It was then that we realized that simply applying technology was not enough. We needed to beef up our marketing to capitalize on these changes and attract more customers. Subsequently, we went full throttle on advertising, but then the COVID-19 pandemic hit. Overnight, digital transactions became the norm. After the dust had settled from all of the lockdowns, we realized that our bank had doubled its customer base, whereas our competitors had remained flat because their traditional way of acquiring customers — opening new branches — simply did not work anymore.
As we prepared for an open finance economy, in 2019 we embarked on the journey of launching UBX, our fintech subsidiary. Huawei's state-of-the-art technology solutions played a pivotal role in empowering our efforts to navigate the complexities of the financial landscape.
In 2020, amid the global turbulence caused by the pandemic, we achieved a monumental milestone by acquiring the assets of Citibank Consumer Business in the Philippines. This acquisition was a strategic triumph for UnionBank.
The fourth phase, in 2022, marked the launch of UnionDigital, our digital bank. Today, it now proudly boasts the largest loan book among all digital banks in the Philippines, and is well on its way to profitability.
Our ongoing fifth phase revolves around the creation of ecosystems in collaboration with suppliers, dealers, corporate clients, and employees, fostering innovation and collaboration.
Traditionally, our bank has been evaluated in terms of assets and loans, typically ranking in the mid-tier. However, we have redefined success to focus on our customer count rather than just our balance sheets. From 2019 to 2022, our customer base soared from 5.9 million to an astounding 13 million, catapulting us to the second position in terms of total customers.
In the digital space, UnionBank has not merely kept pace; it has set the standard. We have emerged as a leader in platforms such as instaPay and PESONet, consistently outperforming even the largest banks in the Philippines. Our mobile app, UB Online, stands as the most downloaded and top-rated app among all banks in the country. Furthermore, our loan portfolio has rapidly transitioned toward consumer loans, with over 50% of our loan book now dedicated to consumer lending.
Our transformation efforts have translated into remarkable financial success. Over the past three years, our total shareholder return has surged to an impressive 112%, far surpassing our competitors. While our stock price closely aligns with the two largest banks in terms of Price-to-Book ratio, it's important to note that banks of a similar asset size trade at only half our Price-to-Book ratio. This underscores our ability to not just reduce costs through technology but to introduce new products faster than our competitors. We firmly believe that, even in the digital age, banking remains a marketing game, with Huawei's technology enhancing our capabilities in this regard. Additionally, as a bank, we recognize that risk management is paramount. With Huawei's technological prowess, we have the ability to conduct real-time risk assessments, further reinforcing our commitment to prudent financial practices.
In conclusion, our digital transformation journey is a powerful testament to the synergy between innovation, adaptability, and strategic collaborations, with Huawei emerging as a pivotal partner in our success story. While technology is undoubtedly a critical enabler, the heart of this transformation remains the people and their ability to drive change. As we continue to forge ahead, UnionBank remains unwavering in its commitment to shaping the future of banking in the digital age and fostering inclusive prosperity across our nation.
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