February 28, 2024

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The Philippines welcomes its first digital-only bank

Image credit: www.tonikbank.com

As the world leader in internet and social media usage, the Philippines also aims to become the leader in digital banking, as it welcomes its first digital-only bank. Branding itself as Southeast Asia’s first digital-only bank, the new player formally launched as the “first neobank” in the country.  A neobank is a type of bank that operates exclusively online without traditional physical branch networks.

The company said that the fact that 70% of the Filipinos remain unbanked shows that the tedious onboarding process of traditional banks. The company also believes that banking should be easy, fun, and – like most services these days – right there, in the palm of your hand. The digital bank uses technology to dramatically cut operating costs, which allows them to offer low-interest rates and not to charge additional fees to its customers.

The digital bank said it aims to disrupt the Filipino retail banking industry by bringing to the market a branchless way of banking on a secure mobile platform.  The platform is supervised by the Bangko Sentral ng Pilipinas (BSP) and its deposits are insured by the Philippine Deposit Insurance Corporation (PDIC). The bank also said that its cloud-based solution is powered by several global financial technology firms.

The company said customers can open a functional banking account in under five minutes using the app, an ID, and a selfie. Users’ accounts can then be topped up in various ways, including interbank, debit card, or in cash at different retail agents across the country.  Immediately upon onboarding, the customer is issued a virtual debit card that can be used at a variety of e-merchants.  The product offer will soon be expanded to include a physical debit card or take out an all-digital consumer loan.

Although aiming for a friendly personality, one of the things that the digital bank said it takes seriously is the security of the client’s funds and transactions on its systems. The company said that it is the first bank in the Philippines certified as compliant with the Payment Card Industry Data Security Standard (PCI-DSS), considered as one of the highest standards in payment card security.  The digital bank’s systems are also certified by the Certified Information Systems Auditor (CISA), the authority in global IT security audits. The digital bank also added that their client’s access is protected by the highest level of safety through server-based biometrics, while all passwords and OTPs are subject to military-grade encryption.

Moreover, the digital bank said it offers deposit interest rates of up to 6% per annum.  To make saving more relevant and social, the company said it also offers unique Stash and Group Stash features, as well as traditional Term Deposits.

Furthermore, more Filipinos are encouraged to open accounts with digital-only banks, or so-called neobanks, as online banking’s popularity is seen to be increasing in the country, according to a study. The study by Backbase Asia-Pacific Pte. Ltd. and International Data Corp. (IDC) noted that 60% of the bankable customers in the country are willing to shift to more digital banks. 80% of the customers in the country is also expected to open new bank accounts with other banks by 2025, according to the study titled “Fintech and Digital Banking 2025.”

With the increasing presence of neobanks and financial technology, the report said that the unbanked and underbanked segments in the Philippines are anticipated to be reduced by half to around 20% in five years.

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