How Aboitiz, a century-old conglomerate, is using tech to rethink traditional industries

If you were to list the companies most likely to revolutionize themselves digitally, a century-old conglomerate with deep roots in power, banking, and real estate might not be your top choice. But that’s exactly what the Aboitiz Group is aiming to do.

Tracing its origins as far back as the late 1800s, Aboitiz is now undergoing what it calls the “Great Transformation” to become the country’s first “techglomerate.” The goal? Use technology not just to make business more efficient, but to rethink the role of business in society as a force for social good.

Smarter energy with ‘virtual’ power plants

The push of Aboitiz into tech is clear in its energy arm, AboitizPower, one of the country’s largest producers and distributors of power. Through “Project Arkanghel,” AboitizPower has partnered with Thailand-based REPCO NEX to bring the first smart power plants to the Philippines.

The project will introduce digital twins — virtual models of real-world plants — of two AboitizPower coal-fired power plants located in Davao City and Toledo City, Cebu. These allow operators to run simulations and stress-test scenarios, and detect potential problems early. Combined with data science and artificial intelligence, the digital twins can help predict maintenance needs and reduce outages.

“This partnership between AboitizPower and REPCO NEX will establish the Philippines’ first smart power plant,” said Aldo Ramos, AboitizPower Thermal chief operating officer of operated assets. “We will harness the power of data science and AI to create a digital twin that will unlock the potential of our existing power plants Therma South and Therma Visayas.”

Ramos added, “Project Arkanghel is pivotal in boosting our thermal power plants’ efficiency and resiliency. It will also help to ensure that our plants provide reliable baseload supply and lessen downtime due to forced and planned outages.”

Reaching the financially underserved with technology

Meanwhile, UnionDigital, the digital banking arm of Aboitiz, is leveraging technology to serve segments of the population often overlooked by traditional big banks.

As a fully digital bank with no physical branches, UnionDigital can profitably serve a P1,000 loan whereas a larger bank might prioritize a P100,000 loan since the bank has a higher cost-to-serve, explained its president and CEO, Henry Aguda. This could bring formal lending to Filipinos who currently rely on informal sources like “5-6” lenders, known for charging exploitative interest rates of 20%.The digital bank is also preparing to introduce “configurable” high-frequency loan products that allow customers to adjust the loan term and borrow smaller amounts. For instance, this flexibility can benefit sari-sari store owners and wet market vendors, who might need quick, short-term loans to buy supplies in the morning, sell throughout the day, and repay the loan by evening.

Giving students tools for the digital world

Beyond finance, the Aboitiz Group is also using technology to improve access to education in underserved communities. The Aboitiz Foundation, through its Aurora PH initiative, is connecting remote schools to reliable electricity and internet.

“The project will initially benefit ten last-mile schools in Zambales and Benguet, where the majority of the learning population comes from Indigenous tribes, namely the Aetas, Kalanguya, Ibaloi, and Kankanaey,” Ginggay Hontiveros-Malvar, chief reputation and sustainability officer of the Aboitiz Group and president of Aboitiz Foundation, said.

The benefits of Aurora PH also extend beyond the classroom. Communities near the beneficiary schools will gain access to solar-powered charging stations, which the Aboitiz Foundation president said would boost emergency preparedness and open doors to livelihood opportunities.

Cutting red tape with technology

Aboitiz is also hoping that technology can streamline government bureaucracy in a country that has for years ranked as one of the worst in the world in terms of ease of doing business.

Through PinasBilis, an initiative developed in collaboration with the Anti-Red Tape Authority (ARTA), Aboitiz is trying to make government processes simpler, faster, and more transparent. Since 2022, the program has trained more than 150 “Ease of Doing Business Champions” in over 20 national government agencies and local government units.

In July 2024, Aboitiz and ARTA turned over the inaugural eBoss Package to select barangays in Lapu-Lapu City, which contained “digital tools [that] will enhance the barangays’ efficiency in responding to the needs of local businesses.”

“This grant of electronic one-stop-shop package is a fitting recognition of our efforts in streamlining our business processes at city hall, driven by our conscious efforts to comply with the Ease of Doing Business as outlined in Republic Act 11032,” Lapu-Lapu City Mayor Junard Chan said.

Transitioning to a lower carbon economy

But technology isn’t everything. When it comes to addressing climate change, Aboitiz realizes it needs a collective approach. Through Carbon PH, a coalition of some of the Philippines’ biggest companies — including the SM Group, JG Summit, and the Coca-Cola Foundation — Aboitiz is looking to build “nature-based solutions” to the country’s environmental challenges.

It’s a rare instance of competitors coming together, but according to Hontiveros-Malvar, it’s the kind of collaboration that makes sense.

“The private sector plays a crucial role in implementing nature-based solutions,” the Aboitiz Group chief sustainability officer said during a meeting in January 2024. “These companies bring forth the necessary resources, expertise, and innovation needed to drive and contribute to sustainable development.”

The coalition holds regular learning sessions where companies can share best practices and discuss how to approach decarbonization.”The idea of these meetings was to bring together like-minded companies, organizations, and individuals that have heavily invested in, and or, are heavily investing further into nature-based solutions, that can deliver meaningful impact in solving climate change,” Hontiveros-Malvar said in a later coalition meeting in April. – Rappler.com