API Business Models

Building a finance marketplace in South East Asia


Union Bank is one of the largest banks in the Philippines and the most digitized one. Union Bank was also granted one of the only seven digital bank licenses in the Philippines with Union digital. UBX is the FinTech arm of the Union Bank of the Philippines. The bank fully backs us, but we’re independent of the organization. This article will detail the different initiatives that UBX engages in and how we are bringing people access to finance. It will detail out how we continuously improve our open finance ecosystem, helping drive financial inclusion.

The basic concept of open finance or open banking is that data held by banks and financial service providers belong to their customers. Open finance refers to the sharing and leveraging customer permission data amongst banks, other financial institutions, and third parties to build innovative financial solutions. At the same time, only a billion people worldwide have access to fairly full-fledged banking, banking without currency controls, and international reach. 2 billion have no bank accounts at all, and the remaining four and a half billion have limited access to financial services. Our vision at UBX is an opportunity and access for all. Our mission is to include everyone.

You’ve been hearing this coined term in the past two years; the pandemic has greatly affected individuals, businesses, and communities. Going digital in the Philippine market has become a necessity to survive and thrive under the new normal. Opportunity and access to technology and digitally-enabled services have become apparent; we must include everyone. We believe data, in particular consent-driven data portability, can be an equalizer in providing access and opportunity to enable previously excluded individuals, businesses, and communities. In the Philippines, financial inclusion means access to financial products like having a transaction account and usage to make transfers and manage money rather than merely withdrawing funds once a month. By providing access to transaction data and enabling low-value payments, open banking can help foster innovation that targets the underbanked, offering legitimate alternatives to inefficient and ineffective financial practices which are present in developing markets like the Philippines.

Open Finance Drives Financial Inclusion

Further, I would like to share some examples of how open banking can concretely drive inclusion, particularly in the Philippines. 

Building credit capacity: By primarily building credit capacity, enabling data sharing, and using a digital payment mechanism, the underbanked population can begin to build a financial profile and transaction history. This can be shared with lenders to understand actual risk profiles better and FintTechs to build better credit scores and improve access to affordable credit. 

Supporting MSMEs: MSMEs are perennially underserved financially. I think this is not just in developing markets like the Philippines and Indonesia but also in developed markets. Both businesses and financial transaction data can be used to provide access to much-needed credit with banking utility for activities like ordering and storing raw goods and supporting a wide array of payment options preferred by their customers. 

Improving sustaining financial health: Imagine bundling a savings product and insurance into the remittances sent home by overseas Filipino workers. For those familiar with the Philippine market, overseas remittances accounted nearly about 9% of the country’s gross domestic product. Imagine the vast opportunity in that space. 

Banking the Gig Economy: It is not just access to digital accounts, wallets, and digital payment instruments. Gig economy platforms can embed and extend nano loans and micro-insurance based on the workers’ activities on their platforms. The open finance framework allows for greater reach to more clients and partners, encourages the entry of more players, and increases the number of financial service offerings. Consumers will have the power to grant access to their financial data, allowing more parties to participate in the financial ecosystem, giving customers the ability and the right to reuse their financial data in new and innovative ways. 

At about the same time other jurisdictions started moving into open banking, we noticed that digital platforms were acquiring customers at scale. That’s a scale far surpassing that of traditional financial institutions. This platform facilitates activities and experiences that truly matter to individuals and businesses. We set out to build digital platforms for digitally and financially underserved communities not being addressed by the big tech. This is due to fractured structures and bad economics while at the same time aggregating and visualizing financial services for embedding into our platforms and the platforms of others.

UBX products

Lending platform: Our lending platform has registered over 50,000 SMEs and has processed 4 billion pesos worth of business loans with an open end-to-end digital lending experience that matches borrowers with 14 different lenders, with more lenders joining every day. The lending platform is embedded into platforms merchants such as Lazada and food panda. 

Embeddable payments platform: It powers over 100,000 businesses, giving them access to a wide array of payment options through a single platform and API, including the largest aggregation of over-the-counter locations in the Philippines, making even cash payments, digital for the merchant and digital to the last mile of customers. 

Our operating system for SMEs has allowed over 30,000 local merchants to get online and start selling in minutes with digital payments and delivery integrated out of the box.

UBX’s open banking platform connects hundreds of financial institutions and 1000s of community-based financial service providers. The National Retail payment system and the domestic remittance networks of the Philippines support an assortment of digital banking services such as real-time payments, mobile ATMs, insurance, and digital lending. For nearly three years that UBX has been in operations, we have innovated around that open finance framework. It is purposely designed to enable the customer’s financial journey, enabling them with a low-hurdle way to create a financial footprint, a channel for credit should they need it, and access to funds by establishing interoperability between hundreds of financial institutions and 1000s of community-based financial service providers. Within the interrelated financial services data ecosystem, data subjects can move seamlessly from one service to another. This aggregation of interoperability between financial service providers behind the single API is an example of market-driven open finance infrastructure, allowing platforms FinTechs and merchants to leverage and innovate across our UBX services. 

In other jurisdictions, we’ve seen that open finance is occurring along two dimensions. The US and China use solutions like Mint, PLAID, WeChat, and Ali pay. In the UK and Europe, a heavy regulatory push with mandatory participation by the CMA9 and PSD2, respectively, with commensurate market pulls through digital challenger banks. In some jurisdictions like Mexico, with the FinTech law, we’re seeing a regulatory push ahead of a market pull. We see Europe as an open finance leader, and we see UBX’s existing traction representing a market pool that complements a regulation-driven push by the local regulator with their open finance framework. 

Just like we connected hundreds of smaller financial institutions to NRPS, through our open banking platform, we can leverage this to include the long tail of the Financial Services ecosystems in open finance. We allow smaller players to leapfrog access the scaling gap to get them to a technology level that can place them in some aspects at par, even with the bigger players. We can include everyone with smaller financial institutions, non-banks, other service providers, and most importantly, their customers, the innovation this open finance model promised. 

I’m also proud to announce xpanse. xpanse is UBX’s open finance infrastructure. We open our infrastructure and aggregation of financial services and providers to developers; not just consent-driven, but customers’ self-sovereignty at the core, leveraging our blockchain-based akin technology. The ability to leverage a d5-friendly store of value through a regulatory-approved stablecoin called phx. Access to a centralized real-time blockchain-based grid through our open banking network. xpanse will not just connect developers to programmable financial services across hundreds of financial institutions in the Philippines but customers to innovation through control of their data. It will connect customers and traditional financial markets to the world’s most innovative financial operating system and the future of banking, opening up the financial marketplace for the Philippines and the rest of Southeast Asia. This is the opportunity before us; UBX is responding to help drive open finance and financial inclusion. We are promoting the adoption of innovative solutions and services through our platforms.

Cyrus Cruz
Singapore Country Head & Managing Director, Insurance and Savings - UBX

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