MORE FILIPINOS are expected to put their savings in digital-only banks that offer higher interest rates than traditional banks as the coronavirus pandemic has amplified the need for easily accessible emergency funds, ING Bank N.V. Manila said.
“The coronavirus pandemic made Filipinos realize the importance of having a separate emergency fund. This led consumers to open new savings accounts to put their money in high-interest digital banks to quickly grow their money — which may have contributed in building a new savings behavior that will endure for the medium-term at the very least,” ING Philippines Head of Retail Mohamed Keraine said in an e-mail on Wednesday.
While it did not provide an exact figure, the virtual bank said the company is on track to double its customer base this year.
ING Philippines’ savings account offers a minimum interest rate of 2.5% per annum, higher than the brick-and-mortar banks. It also does not require a minimum amount to open an account.
The lender added the banked population in the country will further expand as the central bank continues to launch several initiatives to boost digital banking in the country.
“I’d like to commend the Bangko Sentral ng Pilipinas (BSP) for its commitment in building a robust digital banking infrastructure to help customers understand the benefits of digital banking and a cashless economy in the Philippines,” Mr. Keraine said.
“As we await the upcoming regulations from the BSP, ING is bullish that these new rules and regulations will gradually build trust and confidence in digital banking to Filipinos,” he added.
The BSP last month said it hopes to release a digital banking framework before yearend that will provide classifications of virtual banks, licensing rules, and guidelines on anti-money laundering and cybersecurity.
With this framework, the central bank expects to increase the population of banked Filipinos to 70% by 2023 and ease the delivery of various financial services nationwide.
Only 29% of Filipino adults had formal accounts in financial institutions in 2019, leaving about 51.2 million unbanked, BSP data showed. In 2017 to 2019, about five million Filipinos were able to open an account.
“Suffice to say, the entry of digital-only banks in the Philippines — with ING being the pioneer of this business model in the country — encouraged the banking industry to diversify its portfolio and achieve financial inclusivity through digital services,” Mr. Keraine said.
“Most traditional banks in the industry are now catching up with the digitalization of banking services, with other major players already considering to open their own digital banking arm to elevate their businesses,” he added.
The BSP wants 50% of payments done digitally by 2023. In 2018, e-payments made up 10% of the total transaction volume, moving up from the 1% in 2013, based on a Better than Cash Alliance report. By value, online transactions made up 20% of the total from just 8% in 2013. — K.K.T. Jose