Jose Arnulfo “Wick” Veloso has led the Philippine National Bank (PNB) to profitability despite the challenges created by the COVID-19 pandemic. Consolidated net income reached PHP 24.3 billion ($474.7 million) as of September 2021. The bank’s core operating income grew by 8% in the third quarter of 2021 driven by sustained momentum in core lending and fee-based activities.

PNB introduced its latest digital app in February 2021 and continues to innovate for speedy delivery of services to customers. It is working with the government to develop key digital infrastructure to support the economic recovery.

His formative training in the military academy and penchant for military history helped him to be mission focused, disciplined and tenacious in achieving his goal. “I have been using the mission-based strategy in leading the organisations I work with. Building a culture of resilience among employees should start from the top,” he said.

Veloso has over 30 years of banking and capital markets experience and spent 23 years in HSBC. He was previously the president and CEO of HSBC Philippines. He took dual roles as head of Asian local currency debt trading, and head of credit derivatives for Asia Pacific at HSBC’s Asian headquarters in Hong Kong in July 2000.  In November 2018, he joined PNB as president. At that time, tycoon Lucio Tan was looking for a leader who can bring back PNB’s competitive edge.  Veloso is also the current president of Bankers Association of the Philippines.

The following keypoints were discussed:

• Launch of PNB digital app
• Exploit ecosystems of financial value and implement effective cyber security management
• Digitalisation and the use of IT tools enable 40% of employees to work from home
• Lend to essential industries and supports economic recovery

The following is the edited transcript of the interview:

Foo Boon Ping (FBP): What is the one key opportunity and challenge that your bank faces in this age of digital innovation and disruption? How transformation has strengthened organisation and operations during COVID-19.

Jose Arnulfo Veloso (JAV): Digital innovation relies on technology as a foundation to drive new paradigms for customer experience and efficient internal operations. Given this, the key opportunity is to leverage technology advancements to drive change, and the challenge is to continually improve PNB’s technology capabilities, security posture, and culture to make this change happen.

Launch of PNB digital app

In the era of COVID-19, we consistently invested on capabilities and processes to enhance our digital posture. The launch of the PNB digital app in February 2021 provides a vastly improved digital experience to our clients, taking advantage of the full capabilities of the mobile device. The app is a product of current agile and collaborative development and marketing processes used by the project teams. With the agile practice in place and continually improved, the bank has in place a foundation for innovation on the mobile space that allows for faster turnaround and speed to market  as compared to traditional methods.

Exploit ecosystems of value and implement effective cyber security management

The bank recognises that technology advances are better utilised with partnerships and with participation in ecosystems of value. Thus, we engaged with industry players, vendors, and the Bangko Sentral ng Pilipinas (BSP) to enable key payment and other financial services for customers. We are participating as a pilot institution in the BSP’s Open Finance Framework project, and is a key player in the BSP’s National Retail Payment System initiatives. Investments to fully exploit this ecosystem of financial value include application programming interface (API) management and fraud management systems that the bank will roll-out in 2022.

As digitisation expands, innovative banking systems and processes enable new and more business, but they will unlock inherent vulnerabilities. Banks, as well as other companies in other industries, saw their share in cyber-attack cases such as social engineering, phishing attacks, malware attacks, among others. In this regard, PNB’s drive to undergo digital transformation and the need to ensure that the security controls are in place in the system and made cyber security management a major business imperative. Amid these challenging times, PNB continues to operate its business functions effectively and efficiently without jeopardising the standards and quality that the shareholders and clients expect from us.

FBP: What are your views of digital transformation driving organisational and operational resilience during COVID-19? How has COVID-19 catalysed opportunities for digital transformation and how has it impacted your institution?

Digitalisation and the use of IT tools enable 40% of employees to work from home

JAV: While it is true that digital transformation requires rapid technological and data architectural advances, it also necessitates the transformation of organisational behaviour and processes in order to keep up with the digital shift. PNB is one of the first companies in the Philippines to transition to work from home setup. With the help of our marketing/human resource/transformation/IT team, we used technology to allow workplace flexibility and to introduce automation and faster processes. As of December 2021, 40% of PNB’s workforce is still working from home and may continue to do so even after the pandemic.

Likewise, we conducted day-to-day meetings via Microsoft (MS) Teams and other online communication platforms. We have continuously updated our training modules to provide quality training to employees for them to adapt to the new reality. As a result, we were awarded the top employer of choice by LinkedIn for 2020. PNB is one of the few companies that has given free access of LinkedIn Learning for all employees. By investing in our employees’ development, we hope that they will become more skilled, engaged, and ready to serve our customers better.

PNB is ultimately embracing the shift towards digital transformation not just for our employees but more so for our customers. With the changing customer needs and expectations, we continue to speed up our adoption of digital technologies and rapidly shift toward interacting with clients through digital and electronic channels. The bank is maximising this time to reimagine and to reinvent its future to become a stronger, better and younger PNB.

FBP: With so much uncertainty in 2022, how will your bank remain resilient? How do you plan to support your customers, employees, and the community to be resilient?

Lend to essential industries and support economic recovery

JAV: As PNB navigates through this challenging business environment, our focus has been to ensure uninterrupted service to the bank’s customers and make meaningful contributions on initiatives to help customers and support the economy. We have been working closely with many of our customers in striking a balance between exploring business opportunities and effectively managing programmes intended to relieve financial pressure while mitigating the increasing credit risk.

As we continue to adapt our business to the “new normal”, PNB is refocusing its new lending activities to essential sectors and industries that have critical functions – during the quarantine and as the economy recovers. These are the businesses that can thrive in the “new normal” or are essential to the recovery of the economy. These include projects covered by the ongoing infrastructure programme of the government, which is focused on supporting economic recovery efforts. Since there is an election this year, we are expecting increased government spending to push the completion of these numerous infrastructure projects nationwide.

FBP: In the space of a year, the competitive landscape in banking has changed. Several of the confident challengers from this time last year have struggled or been acquired. What insights into resilience for banks and banking can we gain from this?

JAV: As the pandemic dragged on, many businesses were forced to cease operations. Some companies, in the hope of surviving, allowed telecommuting arrangements for some of their eligible workforce. Several employees were forced to work from home, be resourceful, and use available collaborative tools. However, the most significant change that impacted the banking industry is the shift of market preference to digital banking and retail innovations.

As technological advancements continue to grow rapidly in almost all industries in the world, PNB and other Philippine banks had its fair share of the sudden shift to the digital banking age. The industry is now gearing towards a more digital approach when it comes to positioning and planning their operations, products, services, and organisation.

FBP: Tell us your personal story. How were you in your younger years or early days of your career? Did you always want to work in a bank? How did you rise up the ranks to be the CEO of the bank?

JAV: I was raised in the boondocks of Marikina, a small town in the Philippines, by my grandmother. I was left to explore and discover things on my own, as well as take care of my smaller cousins. My parents had already retired and went back to the province to manage our farm. As a kid, I originally wanted to be a pilot. After which, my fascination of being a soldier has stayed on. During high school, I became the class commander and eventually became the company commander at the Citizen’s Army Training in preparation for entering the prestigious Philippine Military Academy (PMA). I read military books and collected military uniforms. Since I graduated early, I enrolled in a Marketing Course at the De La Salle University (DLSU), planning to join the PMA a year after. However, things did not go as planned as I got married when I was still in the university. After graduation, I grabbed the first job opportunity, which was banking.

Growing up, my friends were significantly older than me, some were double my age. The experience allowed me to be familiar with people with wisdom, what makes them smile, tick, and make meaningful conversations with them.

My first job as a management trainee helped me learn end-to-end banking training, which enabled me to be trained across the board. When I was assigned at the Treasury department in the brokering of bonds, in my first week of brokering, I was able to close a transaction that allowed me to meet my quota for the month. I extremely enjoyed being a salesperson. Probably, the conversations with people older than me proved beneficial. It helped me approach, mingle, communicate, and understand their language even as a fresh graduate. I was comfortable talking to astute businessmen and this gave me the patience to approach companies that my previous company did not have a relationship with. I waited hours, patiently talking to prospective clients. Even unsuccessful client visits, walking from company to company with my worn-out shoes and even riding the public utility buses plying the streets of Manila, did not deter me from having a positive mindset. Being complacent is not part of my vocabulary. I study, learn, and always do something more.

It paved the way for growth - from being a junior officer to a manager, to a consultant, to head of treasury and, eventually, being president of Hongkong Shanghai Banking Corporation (HSBC) and now Philippine National Bank (PNB). I realised the hurdles of working in local banks, smaller institutions, and multinational companies. I was assigned in Hong Kong from July 2000 to July 2003. Having missed the Philippines, I went home to be the first Filipino CEO of HSBC. Until in 2018, Dr. Lucio Tan of PNB wanted to get someone to bring the bank to the competitive edge. I rose to the challenge and the rest is history.

FBP: What does resilience mean to you personally? How does one become resilient?

JAV: For me, resilience is inner strength and mental fortitude combined. It influences a person’s way of responding and managing difficult challenges or setbacks. Our belief, attitude, and mindset- they all shape our way of not only adapting to change, but also to thrive and flourish with change. With more than 30 years in the banking industry, I have maintained a positive outlook.

With every new job offer comes the challenge of the unknown. I have been given various job assignments, a lot of which were new to me. But I was up for the challenge. I did not see it as a setback, but continued to study, strategise and I was willing to learn something new every day.

There is no easy way up, everything entails a lot of sacrifice. People only see success, but they don’t see the sacrifice. The long nights in the office and tenacity to win helped me become who I am today. Indeed, how a person views adversity will determine his/her success. Every mistake teaches us a lesson, so does change. Look for the lesson in every situation and have the right perspective. The choices we make every day determine our inner strength and mental fortitude to rise as a winner.

FBP: COVID-19 is a crucible within which resilient leadership has been refined. What do you think is at the heart of resilient leadership?

JAV: Early on, I mentioned that I have been fascinated with being a soldier. Being in the military, you need to study your mission, have the discipline and the tenacity to achieve the goal, whatever it takes. I have been using the mission-based strategy in leading the organisations I work with. Please bear in mind that you cannot build resilient teams without resilient leaders. Building a culture of resilience among employees should start from the top.

I am thankful for my mentors for giving me the roots, instilling the core values most especially of hard work, for teaching me to have an adaptive mindset, to be responsive, to always communicate, as effective communication is the key and to always be purposeful in my actions. My previous work abroad has given me a broader perspective. I learned a lot from working with individuals coming from multiple cultures, managing different countries having diverse problems, and gathering them to take care of the business. With this comes calculated risks. I continue to develop my team in transforming challenges and setbacks into breakthroughs. It has taught me to build relationships founded on trust, and to be accountable while being empathic and compassionate. The focus of resilient leadership is developing a culture of greatness in your team. You have to let people do their work and be able to shine as well.