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In a sea of 110 million Filipinos where two-thirds of the population have no bank account, the battle for the best digital bank in the Philippines is taking shape. Under the new normal, there is a recorded surge in the value of digital transactions amid the pandemic.
The UnionBank of the Philippines recently announced that they got the green light from the Bangko Sentral ng Pilipinas (BSP) to establish a wholly-owned digital banking subsidiary known as the UnionDigital Bank.
But what is virtual banking, and how does it differ from online and mobile banking?
Online Banking versus Mobile Banking
The fine line that separates these two services is the kind of device used to access them.
- Online banking, also known as e-banking or internet banking, is a financial transaction performed over the internet through the traditional bank’s website using a computer or laptop.
- Mobile banking enables customers of traditional banks to transact with online services through a mobile app or website using a smartphone or tablet.
Online Banking vs. Mobile Banking vs. Digital Banking
Here comes a triple threat match: A rising trend in the industry is the all-digital banking, which has a slight difference in terms of online operations. It entirely substitutes the bank’s physical branch with a full online presence and automation of financial services.
The BSP introduced the “digital bank” category in 2020 to bring more people into the virtual financial system. They initially intended to issue five digital banking licenses to companies without physical branches with a capitalization of at least PHP 1 billion.
The future of banking is digital
Some Filipinos are hesitant to try what a virtual banking experience offers. However, compared to traditional banks with a full range of services, these perks make digital banking enticing:
- No more long lines, 24/7. You can save your time and do something more productive than waiting in long queues. You can access digital banking services anytime, anywhere, as long as you have a stable internet connection at home, in the office, or on the go. Just be mindful of the scheduled system maintenance or upgrade when setting your transactions.
- You can always manage and keep track of your account. With just a few taps — voila! Digital banking allows customers to manage their transactions, whether it is to transfer money, pay bills, and view their history while being eco-friendly with paperless statements.
- Digital banks “share their blessings” with customers. Because fully digital banks have no physical location, the customer service is via phone call, email, or chat. The automation reduces operational costs, allowing digital banks to “save up” and share their blessings by waiving transaction fees, initial deposits, or maintaining balance to their customers. As a bonus, most digital savings accounts earn higher interest rates compared to traditional banks.
How do I choose the right digital bank for me?
It’s essential to understand the differences of each service to know your options and decide what is the best digital banking in the Philippines.
When UnionBank opened its first fully digital branch in 2017, The Ark, it enabled their customers to transact using screens and tablets. But the Aboitiz-led bank did not stop there. Fast forward to 2021 and they are ready to introduce UnionDigital, a wholly-owned subsidiary set to compete as the Philippines’ fourth digital-only bank.
Among the digital banking pioneers in the country is ING, a Dutch financial services company that started in the Philippines as a wholesale lender in 1997.
OCTO by CIMB Bank positions as an all-digital mobile-first bank in the Philippines. It launched its operation in the country on December 2018, but CIMB Bank already established its name as a Malaysian lender with branches across Southeast Asia.
Overseas Filipino Bank (OF Bank) is a digital-only bank that is a fully-owned subsidiary of the LandBank of the Philippines that caters to the OFWs and their families back home.
Launching in the Philippines this 2021 is UnoBank by the Singapore-based fintech company, DigibankASIA.
Tonik introduces itself as the first neobank in the Philippines. A neobank is 100% digital bank without any physical branch, existing independently from traditional banks.
These digital banks compete with traditional and online banks in the Philippines, which are also planning their digital transformations. As more and more companies jump into the digital banking industry, find out how you can protect your hard-earned savings in our next topic.
Jeddah Legaspi is a communicator who loves to share the places, faces, and her learning experiences from grad school and life outside work. She is also a co-founder of ISDApp, a NASA-awarded app, and a marketing creative who uses the new media to bring valuable information to Filipinos.