The Philippines, a nation of over 7,000 islands, presents both unique challenges and remarkable opportunities for those seeking to drive transformation and inclusion. In this interview, we sit down with Jose Teodoro Limcaoco (known as TG), the president and CEO of Bank of the Philippine Islands (BPI)—the oldest bank in Southeast Asia. Limcaoco’s journey spans countries and industries from software engineering in Silicon Valley to investment banking in New York, ultimately to leading a financial institution that includes customers across the archipelago.
As BPI navigates the complexities of serving a diverse and geographically dispersed population, Limcaoco shares his insights on balancing legacy and innovation, harnessing technology for financial inclusion, and building a culture rooted in purpose, empathy, and customer obsession. In this interview, McKinsey partner Bharath Sattanathan and Limcaoco explore how BPI is bridging islands and empowering communities, and discover the leadership philosophies that guide Limcaoco through the ever-changing tides of the banking industry.
This interview has been edited for length and clarity.
Bharath Sattanathan: Good afternoon. It’s lovely to have you here. It’s a privilege to speak about your decorated career and the pivotal role that you play in shaping financial services in the region. We are excited to hear about your unique perspectives on transformation and leadership. I’m excited to go under the hood to understand your personal journey from being a software engineer to an investment banker to a retail banker to an energy CFO to a conglomerate CFO, and then the CEO of BPI.
TG Limcaoco: Thanks, Bharath. Happy to be here.
As you said, I started my career as a software engineer. I graduated from Stanford with a degree in mathematical sciences, then joined a semiconductor firm, but did a lot of their software engineering. Two years later, I decided I wanted to follow the family path into banking and, to change careers, I had to get an MBA.
I went to Wharton for the MBA and from there joined a trading desk at J.P. Morgan in New York, wrote some software for them and some mathematical models for their derivatives desk. I came back to the Philippines and joined BPI in 1989, did some investment banking for them as a junior, did some fixed income trading, ran a derivatives desk in Singapore for J.P. Morgan, ran a brokerage firm for a British bank, eventually became CFO of Ayala Corporation, and then came back to BPI as the CEO.
Bharath Sattanathan: That’s a fascinating journey. Financial services has been through many ups and downs. What are the guiding principles that shape your personal decision-making during these uncertain times?
TG Limcaoco: I’ve always seen a career as something you need to be passionate about. I’m passionate about technology. I’m passionate about anything mathematical. And I cannot think of a better merger of technology and math than banking. I always tell people, a bank is something that enables our clients to fulfill their dreams. The purpose of banking is to really make people’s dreams come true, to build better lives. Banking is just a service that helps people attain their ambitions.
The purpose of banking is to really make people’s dreams come true, to build better lives.
Banking in the digital age: Harnessing data and technology
Bharath Sattanathan: Let’s talk a bit about the industry itself. How do you see the future of banking?
TG Limcaoco: For me, banking is about data; it’s about harvesting data. A bank is really the keeper of people’s data—the biggest piece of data being your wealth and the amount of funds that you might have under your control.
First of all, you need a very strong technology core to ensure that this data is kept safe and secure, and that people believe that. Then you need to provide services after that. You need to be able to show people what they can do with their data, what you can do with their data, and to provide them with more services. It is a question of using this data properly and using it as efficiently as possible.
Bharath Sattanathan: How do you strike the right balance between the investments in technology and delivering strong financial performance?
TG Limcaoco: You need to spend and invest a good amount of cash today because technology is constantly changing. Technology will also be the differentiating factor in the future. The institution with the best technology, the institution with the most stable, most secure technology will win.
Bharath Sattanathan: BPI is the oldest bank in Southeast Asia. How do you manage the weight of that legacy with constant innovation and modernization through technology?
TG Limcaoco: You have to remember what your strength is and what part of your legacy is core to your strategy or sustainability. For us, it is the legacy of trust. The bank has always been an institution with a very strong credit culture and a very strong risk management culture. For me and the team, that is sacred. That cannot change. We have always kept that at the back of our minds.
Now, you have to balance that with the investments you make, the new products you launch, and your aggressive stance. For example, we decided to broaden our customer base, which is an aggressive strategy because you have to make investments to capture that market. Before, the bank was very happy to play with the top economic segment of the country, which is a very stable, secure, and constant customer base. Now we want financial inclusion. But this base, while it is broader, also gets affected more by economic changes. It is more difficult to reach. You need technology to reach it. In the last couple of years, we have used technology to acquire and service this customer base at a very reasonable and very economic price.
Reaching every island: Expanding access and inclusion
Bharath Sattanathan: The Philippines has a unique, underserved, and underbanked population. How do you serve the unique needs of the rural and the underbanked, while maintaining profitability?
TG Limcaoco: You have to believe that financial inclusion is key to profitability. At BPI, we believe that if the economy grows, everyone should grow with it. If we bring people into the banking world, they will benefit from it by getting products and by having access to credit. What’s good for the masses is good for the business.
To serve the masses, you need technology. We use a strategy called agency banking, where we work with partners to provide banking services where our customers are located. For example, drugstores, department stores, and convenience stores are now using our technology to be able to acquire customers for us to be able to do banking transactions at their stores.
Our philosophy is, if you cannot come to the bank, we will bring the bank to you.
The next step is to work with the major partners. Aside from allowing them to provide services to our customers, you also give them credit so that they can grow their business.
Our philosophy is, if you cannot come to the bank, we will bring the bank to you.
Bharath Sattanathan: What are the unique complexities of managing a branch footprint in the Philippines?
TG Limcaoco: Well, as you know, the Philippines is an archipelago of over 7,000 islands. Not that we have a branch in every island, but to go around to all the branches is a logistical nightmare. About half our branches are in the metropolitan region, but the other half are in the provincial areas. And it does take a while to travel to all of them.
We have to make a conscious effort to visit them. When I visit branches with my team, we will fly to an area and make sure that a day or two is committed to visiting all the branches there. There are certain areas where we will do up to 15 branch visits over two days. At every branch we need to spend time with the people, introduce ourselves, shake their hands, and give a little talk. And, of course, in the Philippine context, always take a picture.
We have 700 branches, which means we have 700 teams out there who need to feel like they are part of the bigger team. A branch is made up of ten, 12, or 14 people who see each other and no one else every day. If people from the head office in Manila fly in and visit them to make them feel part of team BPI, it goes a long, long way.
Culture at the core: Customer obsession
Bharath Sattanathan: Transformation comes with its own set of challenges and risks. When you went through this, what were some challenges that you had to face?
TG Limcaoco: First, we transformed the way we think about technology. We brought technology to the business managers and gave them the responsibility of thinking about the technology that they needed and what they wanted it to do for their customers. Traditionally, it was the technology people who told the business, “This is what you can do.” We’ve flipped it around, and I think that’s reasonable because today more and more people are technologically adept, they’re more knowledgeable, and the markets demand a lot of technology.
Two, we also agreed that if we wanted to broaden our customer base, we had to be really serious about putting the customer at the core. And that starts with the leadership team. The leadership team sat with the frontliners, tried to do their work to understand their difficulties. We made sure that we talked about our core values and we simplified them. They are called “NICE” values: being Nurturing, acting with Integrity, being Customer-obsessed, and acting with Excellence. But in reality, you don’t even have to remember what NICE stands for, right? You just need to be nice every day to your customers and to your colleagues.
We begin every meeting with a pledge that everything we say at the meeting will be in the best interest of the customer. We have agile teams that look for problems with customers, we have business groups that report their issues, we have a team that looks for solutions for customer issues, and we solve them.
We measure ourselves against the other banks with an independent agency just to make sure that we know where we stand.
Bharath Sattanathan: As banks think about looking at how they measure success in the next five years, considering all this uncertainty and everything that’s happening, how do you think they should measure themselves? What are key markers?
TG Limcaoco: Our board and our shareholders want return on equity, they want profitability, and they want our cost-to-income ratio. They check the growth rates of our revenues, and they want to see the mix of revenues. But how do you motivate an institution of 22,000 people? You can’t go and say, “Hey guys, let’s get an ROE of 15 percent.” That doesn’t work. You need to distill and communicate goals that are very simple, that everyone understands.
At BPI, we want to acquire all the customers we can. We have a number—we want to have 50 million customers. We want to be number one in customer service. Those are the two goals we communicate to everyone in the institution. The rest, the return on investment, is on me and my team. But the 50 million customers and being number one in customer obsession, that is on everyone.
Building trust: Friendship at the top
Bharath Sattanathan: What are some of the toughest decisions you have had to make as a leader over the last five years and how did you overcome them?
TG Limcaoco: The toughest decisions always have to do with people. It is easy to make a business decision on a strategy. The toughest decisions are getting people to a certain responsibility or removing people from certain responsibilities. This is where you need to be absolutely honest with yourself and with your people. If they understand why you are making a move, then they appreciate it better. You need to rely first on your trusted people. If I have difficulty making a call or I am beginning to doubt, I will talk to my people and ask them what they think.
My leadership team are a bunch of friends. If you just consider yourselves as colleagues, then you are only thinking about what matters for the business. You also need to think not only about what matters for the business, but what matters personally. That is the only way you will build trust and openness. And so, we work really hard at being friends.
Bharath Sattanathan: How does that friendship motto ensure success?
TG Limcaoco: Well, if you are friends, then the trust level is very high. If you are friends, the openness and the frankness is very high. These are the three things you need as a team. You need to be honest, you need to trust, and you need to be open with each other.
But to be friends in the office environment when you are high on the totem pole can be difficult. So once a month, we go out socially and discuss things in a very informal way. We have a business meeting where we will discuss the performance of the bank, and then we will break for dinner, drinks, and karaoke. If you do this every month, you cannot help but become friends.
My leadership team are a bunch of friends. . . . If you are friends, then the trust level is very high. If you are friends, the openness and the frankness is very high. These are the two things you need as a team.
The future unfolds: Banking in 2030
Bharath Sattanathan: Now let’s fast forward. Let’s look at the year 2030 and the Philippines. If you had a crystal ball, where would Philippines banking be in 2030?
TG Limcaoco: I think you are going to have an industry that is very broad. Today, about 30 to 40 percent of the population are banked by the formal banking sector. Another 20 to 30 percent are banked by fintechs. I hope that by 2030, 100 percent of the population will be banked in the formal banking sector, which means they have access to credit and digital payments. I think that is possible because the country is putting in the infrastructure that is needed.
Both the banks and the fintechs are investing. The winners will be those who invest in technology, those who know how to use data, and more importantly, those who treat their customers the best.
The winners will be those who invest in technology, those who know how to use data, and more importantly, those who treat their customers the best.
We put a big push on internal learning at BPI. We make sure that our people continue to grow their knowledge, because the future will require people to be more technologically adept across the organization. People will need to know how to use AI and write the right prompts. People will have to understand that AI is there as a tool.
You need to educate people so that they remain relevant and productive, and can adjust their jobs and their work, because work will change. A lot of repetitive work, and work that can be changed or adjusted or affected by AI, will disappear. But there will be new jobs and new responsibilities that people just need to be trained for. The conscious decision to invest in training tools and give that to our people is part of our strategy.
Words of wisdom: Aspiration, inspiration, and appreciation
Bharath Sattanathan: What is your advice to other leaders?
TG Limcaoco: For me, leadership is about three things. Leadership is about setting aspirations and setting easy-to-understand goals so that people are aligned. Leadership is about providing inspiration to your team. Because if you cannot inspire people, they will not follow you.
Leadership is about making sure that you show the proper appreciation for the success that your team gives you. Then it's a virtuous cycle. As you appreciate them, you can set new aspirations and provide new inspiration. For me, that’s my mantra: aspiration, inspiration, and appreciation.
And then, as a leader, you need to be true to yourself. I would never ask someone to do something that I would not be willing to do myself. For me, that’s core for leadership.
Bharath Sattanathan: Wonderful, TG. Thank you so much for your time today.
TG Limcaoco: Thank you.
