Following its acquisition of Citibank’s local consumer banking business, UnionBank has shifted from integration to strategic scale-up. A year after the landmark deal, the bank is no longer focused on harmonising systems but is driving growth through embedded finance and digital infrastructure. “Last year, we grew our credit cards customer base by close to 25%, adding nearly 600,000 new customers,” said Manoj Varma, head of consumer banking.

With overall 17 million customers, UnionBank now holds one of the largest customer base in the Philippines. The Citibank integration enabled the bank to diversify its portfolio and accelerate efforts in cross-sell, partnerships and digital onboarding.

Embedded finance as a growth engine

UnionBank’s strategy leverages partnerships with major brands to embed financial services within daily consumer journeys. “We are now getting almost 30% of our acquisitions through partner channels,” Varma explained. “The cost to acquire customers through these partnerships is a fraction of the cost incurred through traditional channels.”

Through exclusive collaborations with the likes of Samsung Finance and other leading OEM’s, the bank has pioneered gadget financing solutions embedded in-store and via partner apps. Unionbank’s “same as cash” pricing programme — a three-way agreement between the bank, leading OEM’s, and top accredited merchants — has enabled thousands of customers to avail of instant gadget loans at same as cash pricing.

Meanwhile, UnionBank’s embedded presence in S&R, a major membership warehouse club, supports co-branded card offerings and deep customer engagement. “We are now their in-store credit card, and offer three times the rebates on S&R purchases at no additional membership or annual fees,” Varma said, noting that customers in this channel demonstrated exceptional credit quality.

Consumer-centricity and credit growth

UnionBank has deliberately positioned itself as one of the most consumer-led major bank in the country. “62% of our total loans are consumer loans— almost three times the market average,” said Varma.

This concentration supports superior net interest margins (NIMs) and fee income. “Around  40% of our revenue in consumer banking comes from fees — InstaPay, merchant discount rate (MDR), late charges, processing fees and more,” he added. UnionBank is currently one of the largest issuers of InstaPay transactions in the country,  underscoring its digital transaction volumes.

Consumer-centricity also drives the bank’s net credit margin — the difference between yield and credit cost — which Varma said is “one of the highest in the market,” though it naturally comes with higher upfront provisioning costs in unsecured segments such as cards.

Intelligent onboarding and AI-powered risk decisioning

UnionBank has digitised more than 80% of its credit card and loan approvals via straight-through processing (STP), enabling real-time decisions and immediate virtual card issuance and usage. This capability allows customers to apply, get approved, and use their card for purchases at the point-of-sale — a key factor in winning deals with large global global OEMs.

Beyond front-end automation, UnionBank is working to digitise backend controls using artificial intelligence (AI) and real-time monitoring tools. “Traditional controls are sample-based. We’re now deploying cockpit-style systems to monitor 100% of transactions in real-time and alert only when guardrails are breached,” Varma explained.

The bank is also testing AI in its call centres, collections and modelling. Technology partners include Microsoft and Amazon Web Services (AWS), supporting the bank’s goal of developing a unified AI platform to prevent fragmentation.

Driving financial inclusion through ‘new to credit’ lending

UnionBank is cautiously expanding into “new to credit” segments — customers without  credit bureau history — using alternative data for risk assessment. “There are only about five million Filipinos on the bureau, but over 100 million people in the country,” said Varma. This market, however, remains risky and underdeveloped. “We are investing in this segment to enhance customer education on the importance of disciplined re-payments and maintaining healthy credit scores.”

This concern is echoed across the digital bank sector, with many experiencing elevated defaults and delayed profitability. Varma acknowledged that unbanked lending remains difficult due to limitations in income verification, employment tracking and consumer awareness.

Ecosystem-led SME and dealer financing

UnionBank’s consumer franchise includes small business banking, which Varma oversees. This segment includes retail and small and medium-sized enterprise (SME) deposits, as well as supply chain financing. “We are expanding into dealer and supplier financing — not just for Samsung devices, but potentially for white goods like televisions and refrigerators, and showroom expansion,” he said.

This end-to-end financing approach mirrors models seen in auto financing, where banks lend not only to consumers but also to dealers for showroom inventory and operations.

Wealth management, trust services and platform consolidation

UnionBank is consolidating its wealth and private banking businesses under a single investment platform — Avaloq — to deliver a seamless client experience. This follows its strategic equity partnership with ATRAM, one of the largest independent asset managers in the country.

UnionBank has merged its trust company (UBIMTC) into ATRAM, boosting total assets under management to nearly PHP500 billion (about $9 billion) across both the bank and ATRAM. The bank now offers a full suite of structured products through global partners  and aims to grow its mass affluent customer base through bundled investment and advisory services.

“We have moved from multiple platforms to a single platform with Avaloq,” said Varma. “That allows us to integrate our private bank and wealth business — improving client experience and cost efficiency.”

Scaling through partnerships, platform efficiency and fee-based income

UnionBank’s strategic direction is anchored in three pillars: expanding ecosystem partnerships, platform integration and scaling fee income. As interest rates begin to ease, Varma sees further margin upside — especially in fixed-rate products like cards. Meanwhile, the bank’s digital leadership continues to yield cost advantages and customer engagement.

With fintechs and digital-only banks struggling with scale and profitability, UnionBank’s full-suite digital capabilities — underpinned by robust physical infrastructure, partnerships and diversified income streams — position it as a frontrunner in the future of retail banking in the Philippines.