MANILA (UPDATE) - The Bank of the Philippine Islands is set to hike its spending on technology by 51 percent compared to the P9 billion spent in 2021, its president and CEO Jose Teodoro "TG" Limcaoco said Thursday.

Limcaoco said during BPI's annual shareholders' meeting that it is prepared to compete with fintech and digital banks by accelerating its digital offerings, investing in innovation, and introducing new products to maintain its market share.

“We continue to make very substantial investments in technology,” he added.

The Bangko Sentral ng Pilipinas has approved purely digital banks as a new banking category with no physical network, therefore, having more flexibility in their offerings such as higher deposit interest rates.

Traditional banks, however, already have an established distribution channel, large customer base, and brand recognition, Limcaoco said.

"Traditional banks like BPI continue to be stalwarts of the industry...To maintain our market leadership, we have to make investments in technology, accelerate the digitalization of our business and operations and improve our customer offering that will all be key," Limcaoco said.

"While fintechs leverage on their low-cost model, BPI will capitalize on the strength of our brand, our significant presence plus a robust digital platform to compete," he added.

BPI now offers pure online and mobile account opening, just like digital banks. It also has a suite of mobile apps, with more platforms to launch soon, BPI chairman Jaime Zobel De Ayala said.

Limcaoco said it would also offer higher rates for the unbanked.

"Soon, as early as possible next month, we will be offering a high yield deposit product to primarily unbanked Filipinos who are digitally savvy," he said.

The BSP in 2021 approved the digital banking licenses of LandBank's OF Bank, UnionBank's UnionDigital, Gokongwei Group's GoTyme, PayMaya's Maya Bank, as well as Tonik Bank and UnoBank, which are both backed by regional fintech companies based in Singapore.

When it launched, Tonik digital bank hit P5 billion in deposits just after 8 months of operations. Its main draw is the 4.5 percent interest rate for deposits and up to 6 percent interest rate for time deposits.

Meanwhile, Maya Bank, UnionDigital, and GoTyme are set to roll out their services this year.

"This healthy competition of the fintechs and neobanks together with incumbent banks will definitely result in a very interesting industry and more developments in the coming year, and our bank is prepared for that," Limcaoco said.

BPI is the country's 4th largest bank in terms of assets as of December 2021, according to the data by the Bangko Sentral ng Pilipinas.

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