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Digital Banking Continues to Gain Traction in the Philippines

Image Credit by : opengovasia

A new research report from a global digital payment firm has found that over 8 in 10 Filipinos (83%) are aware and interested (81%) in using digital banking services. However, only 32% of respondents are currently using services offered by a digital bank.

As more digital-based solutions develop in the market, Filipinos are more open to innovations that make payments and banking more convenient, accessible and seamless, said the global digital payment firm’s country manager for the Philippines and Guam via news reports.

Top interest drivers for Filipinos to use digital banking services include access to banking services any time of the day (68%), time saved from not having to queue at bank branches (68%) and convenience (67%). The study also showed that Filipinos are most keen to work with a financial services brand for digital banking services (93%) and traditional banks (92%), followed by new start-ups with digital banking services (72%).

Filipinos interested in banking with digital banks are keen to use services such as paying bills (84%), transferring money locally (78%), making deposits and withdrawals (76%), and making payments for purchases at local retail locations (71%). However, the preference of using digital banking for traditional bank services such as investments (52%), international transfers (48%) and loans (46%) is lower.

In addition, 86% of Filipino respondents would switch current banking services to digital banking services if the bank provided better rewards and 85% would do so if they can benefit from lower costs for their banking transactions. Filipinos’ interest to use digital banking services increased to 80% compared to 70% in the previous year when the same research was conducted.

Awareness of digital solutions such as biometrically authenticated payments grew to approximately 80% in 2020 from 60% in 2019. Almost 8 in 10 Filipinos express high awareness and interest in using biometrically authenticated payments.

Biometric payment is perceived as a quick (62%) and innovative (61%) way to pay. In addition, 5 in 10 Filipinos (55%) think it is a more secure way to pay. However, usage is low at 23% since its accessibility depends on market availability. Finger scan as one of the biometric authentication methods is most popular amongst Filipinos (59%) especially for making bill payments or purchases at convenience stores. This is followed by facial recognition (31%) and retina scan (16%).

There is an opportunity in the Philippines for traditional banks and new players to launch digital banking services in the country that will better serve the needs of underserved and underpenetrated segments, said the digital payment giant. They believe this will transform the banking and payments landscape in the country and they are keen to work with all their partners to help them create a better user interface and experience when they create and enhance their digital banking solutions.

As reported by OpenGov Asia, the Philippines’ Bangko Sentral ng Pilipinas’ (BSP) has a vision for the country to become a digital-heavy, cash-light society to help achieve inclusive growth. According to the BSP, 50% or half of all transactions should be digital by 2023, and 70% of Filipino adults should have formal bank accounts by 2023.

The BSP highlighted how the pandemic has been a catalyst for financial digitalisation, as mobility restrictions prompted more people to use digital payments. In 2020, over 4 million new electronic financial accounts were created in the Philippines. Cybersecurity is also top of mind for the BSP as it seeks to build public trust in digital banking, adding that digitalisation measures go hand in hand with ensuring a safe cybersecurity environment with fintech institutions facing the same regulatory environment as banks.

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