Digital Banking in the Philippines: Everything You Need to Know
By: Ricky Publico
Published on: March 29, 2021 . Last updated: April 28, 2021 Category: Personal Finance
“The reality is that nobody wants to spend time on banking, especially when it means taking time to visit the bank branches and waiting in line,” ING Bank’s Head of Retail Banking Mohamed Keraine said in an interview . This is where digital banks in the Philippines come in.
In a recent McKinsey study, researchers found that only 14% of Filipinos with bank accounts are taking advantage of their respective banks’ online capabilities. The researchers attributed this to the country’s lack of initiative in providing a digital banking experience.
But banking institutions should stay optimistic. In the same McKinsey study, they found that 65% of the respondents will consider opening an account with a trusted digital bank. While traditional banks relied on online banking websites and apps to make banking easier, they are without their limitations.
These limitations brought us to the technology we have right now: digital banking. As a flashy new tech, digital banking will definitely be a challenging concept to explain to the common Filipino. To help educate the masses, here’s a primer on how digital banks in the Philippines are changing the way we bank.
Table of Contents
What is Digital Banking?
In a nutshell, digital banking allows you to do all banking transactions right on your smartphone. It sounds too simple, but that’s pretty much what it is. Download the bank’s app, open a bank account, deposit money, and manage your account at the comfort of your home.
By containing the entire banking process on a single app, digital banking aims to make banking more accessible than ever. Here are just some of the benefits that digital banking brings to the table.
Advantages of Digital Banking
- Digital Processing – no documents or forms to sign
- Paperless Transactions – no receipts, invoices, paper products
- 24/7 Customer Service – no banking hours, call anytime
- High-Interest Savings – save more money when banking online
- Mobile Deposit – just take a picture of your check
- Easy Banking – no hidden fees, just do your thing
- Secure Banking – prevent hackers from snooping around
Disadvantages of Digital Banking
- Managing Cash Deposits – no easy way to deposit cash on hand
- Lack of In-Person Support – no quick way to ask for support
- More Prone to Cyberattacks – hackers can scam unsuspecting clients
Despite recent developments, digital banking in the Philippines is technically still in its infancy. Foreign banks are already making their presence known, while the country’s top banks are trying their best to catch up. Regardless, there’s no mistaking it—the future of banking is definitely here.
Digital Banking vs. Online Banking
“But we already have online banking,” you might say. Yes, online banking in the Philippines has been popular in recent years, but it has significant limitations. For one, you can only get access to online banking apps if you already have an account to a specific bank.
In order to open a bank account, you have to go to a bank and have it processed there. Also, you can’t make deposits to your account through online banking. You have to find deposit machines, which are not as abundant as ATMs, or you can go straight to the bank and have bank tellers deposit the money for you. It’s a minor complaint for some, but it’s a big deal for the folks in rural areas.
This is where the advantages of digital banking come in. Thanks to this latest innovation, you can now open a digital bank account in a matter of minutes. Just provide your basic information, take a photo of your primary IDs and signature, and presto! You now have a bank account.
You can also deposit money right where you are, although to some extent. Just take a picture of your check and the banking app will instantly deposit the money to your account. While it doesn’t work on paper bills yet, it’s still better than actually going out to the bank. Basically, digital banking is a lot like online banking, only better in execution.
Top Digital Banks in the Philippines
Leading the charge in the digital banking space is Dutch giant ING (Internationale Nederlanden Groep) Bank. Considered as one of the most prestigious banks in the country, ING Bank was the first one to explore the potential of digital banking in the country.
ING launched the first-ever fully digital retail bank in the Philippines in a press event hosted by James Deakin. The renowned TV personality showcased the capabilities of ING’s app to everyone.
“I opened my account online using the ING app and it took about 10 minutes in total before I received an account number. All I had to do was fill up some basic info, take a photo of my driver’s license and then use dynamic face recognition, take a photo of my specimen signature, and boom! I was up and running!” Deakin wrote on his Instagram.
They also partnered with PESONet, InstaPay, and 27 online payment channels to make deposits and fund transfers easier. And if that’s not enough, ING currently offers a 2.5% savings interest, higher than most banks.
Another relatively new player is Malaysia’s own CIMB (Commerce International Merchant Bankers) Bank. A banking heavyweight in ASEAN countries, CIMB Bank also realized how Filipinos are progressive when it comes to digital banking trends.
According to CEO of group ventures and partnerships Effendy Shahul Hamid, they envision CIMB to provide a “seamless and hassle-free” digital banking experience. Judging by the reviews of their apps, CIMB is currently on the right track.
As CIMB Philippines CEO promised during their launch, “We will encourage more Filipinos to seamlessly open a bank account and enjoy the benefits of having a relationship with a forward-looking bank.”
True to their word, CIMB Bank made sure to pack their app with lots of useful banking features. Aside from the usual digital banking features, CIMB allows you to apply for a personal loan right from the app. Customers can loan up to PHP 1 million with zero processing and early settlement fees. Digital loans can get approved as fast as 24 hours.
Taking digital banking a step further is Tonik Bank, the first neobank in the Philippines. Officially launching in March 18, 2021, Tonik wowed everyone with their 6% time-deposit rate and up to 4.5% savings account interest rate. Being completely online and having no physical branches to manage allowed Tonik to offer such high rates.
According to Tonik CEO Greg Krasnov, Tonik aims to “romance” Filipinos to start saving up. “We started Tonik because we were fed up with how traditional banks mistreat their customers. The fact that 70 percent of the Filipinos remain unbanked shows that the tedious onboarding process of traditional banks and their ridiculously low interest rates do nothing to satisfy the needs of the consumers,” Krasnov said.
Tonik Bank also touted their use of advanced technology to reduce costs and improve Filipino’s banking experience by introducing more innovative services in the future. “In the long term we believe what we’re currently offering is definitely sustainable and they deserve it. People work hard to save money and they deserve to earn money from their money,” Krasnov said.
Comparison of Digital Banks in the Philippines
|Features||ING Bank||CIMB Bank||Tonik|
|Interest Rate (p.a.)||2.50% (after the promo period)||Up to 3.10%||Up to 6%|
|Account Types||ING Savings Account|
|Money Transfer||PESOnet for sending money InstaPay for receiving only||PESOnet||InstaPay|
|Bills Payment||Not available||Available||Not available|
|Personal Loan||Coming Soon||Available||Coming Soon|
|Debit Card||Not available||Available||Virtual Card|
|Mobile Check Deposit||Available (banking days only from 1:30 a.m. to 3 p.m.)||Not Available||Not available|
There’s no doubt that a cashless future awaits the Philippines; it’s just a matter of when. And by the looks of it, that future is within our grasp. The challenge now is to convince a skeptical public to embrace digitization in banking.
Slowly but surely, digital banks in the Philippines will help Filipinos familiarize themselves with digital banking. Give it a few more years and eventually, anyone who can use a smartphone will now have their own digital bank account.
Related Article: How to Open an Account and Earn Online Using Diskartech App
-  5 things you could do better with an all-digital bank (Inquirer, 2019)
-  Malaysia’s CIMB launches ‘all-mobile’ bank in Philippines (ABS-CBN News, 2019)
-  Digital-only bank Tonik woos with staggering deposit interest of 6 (Inquirer.net, 2021)
Ricky is the zaniest Senior Content Writer at Moneymax, with over five years of writing experience in the digital marketing industry. He is a huge fan of pro wrestling, smartphones, and binge-watching. Follow Ricky on LinkedIn.