by Ricky Publico, on category "Personal Finance"
June 13, 2019
“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 has been the prevailing notion that urged the banking industry in the Philippines to bring banking closer to the public. 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 fully 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: fully 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 transformation in banking can change the way we bank.
In a nutshell, fully 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, fully digital banking aims to make banking more accessible than ever. Here are just some of the benefits that digital banking brings to the table.
Fully 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.
“But we already have online banking,” you might say. Yes, online banking 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 input 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.
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. And just recently, they 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.The ING Bank app is available on App Store and Google Play for free.
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. Just a few months ago, they launched their all-digital mobile-first banking app called OCTO, complete with an adorable octopus mascot. According to CEO of group ventures and partnerships Effendy Shahul Hamid, they envision OCTO 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 OCTO 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. The CIMB OCTO app is available on App Store and Google Play for free.
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. Fortunately, traditional banks are starting to respond. For instance, PNB recently launched their first all-digital branch in San Juan City, while Unionbank basically did the same in Makati City. Slowly but surely, these banks 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.