Digital banking has been growing rapidly in Asia, with countries such as South Korea, China and Japan enjoying reasonable success. In Southeast Asia’s digital banking sector, the Philippines has joined Singapore as an early adopter of digital banking products and services amid a surge in demand for digital transactions in recent years, serving the country’s largely unbanked population.
A 2019 report by the Bangko Sentral ng Pilipinas (BSP) noted that 70 percent of Filipinos did not have a bank account. Additionally, a decline in the use of checks and ATMs, coupled with an increase in digital transactions was observed in 2020, according to the BSP.
In response to the urgent need for digitalization, the BSP introduced Circular No. 1105 in 2020, titled “Guidelines on the Establishment of Digital Banks,” authorizing the application for official digital bank licenses. The central bank’s goal is to digitize 50 percent of transactions and encourage at least 70 percent of Filipinos to open their own financial accounts by 2023.
In addition, the BSP limited the number of digital banking licenses to six, down from the original seven, and suspended acceptance of new digital banking license applications until the end of 2024 currently, at support competition among emerging digital banks. While issuing the guidelines for the establishment of digital banks, the central bank provided a separate categorization to enhance the provision of financial products and services to customers by the digital banking sector.
BSP Circular No. 1105, authorized by then BSP Governor Benjamin E. Diokno in December 2020, delimits a digital bank as an entity providing financial products and services through digital and electronic channels without physical branches. Current BSP Governor Eli Remolona Jr. acknowledged that there are many groups, both foreign and local, that have expressed interest in operating a digital bank in the Philippines — but says lifting the moratorium It will depend greatly on the health and commercial sufficiency of the six current digibanks.
Under the guidelines, digital banks are allowed to offer loans, accept savings and term deposits as well as foreign currency deposits, invest in securities, provide e-money products and credit cards, market micro-insurance products and engage in the buying and selling of foreign currencies, among other services.
Now that at least a year has passed since the start of operations, each digital bank is accessible through at least one mobile app. Here is a look at the products and services each offers in the Philippines.
Tonic
Tonik Digital Bank Inc., commonly known as Tonik, was launched in the Philippines in 2021. Its consumer products range from deposits, payments, debit cards, and loan offerings for individuals it was recently upgraded to serve SMEs.
The Tonik account is its primary savings account with a savings rate of 1% per year. As is quite common with regional digital banks, customers can also choose to save in goal-based savings “pockets,” which Tonik calls Stashes. Opting for a Solo Stash for one person can earn 4% interest per year, while saving with family and friends in a Group Stash toward a shared goal (a family vacation, for example) can earn 4.5% interest per year. The digital pure-play recently unveiled “Luv Stash” savings goals with 4.5% interest rate for couples.
Users can also opt for term deposits, which are only paid out once they reach a predetermined maturity period. This is where the most attractive interest of 6% per annum can be earned. Tonik issues a free “virtual debit card” with every account opening, but a physical debit card can be requested within the app for a fee.
In addition to the savings, Tonik now offers microloans of up to PHP 20,000 with flexible repayment terms, as well as buy now, pay later (BNPL) terms of up to PHP 100,000 at partner stores, with a minimum down payment of 10% on a fixed monthly interest rate of 4.5%.
Bank OF
The state-owned Overseas Philippine Bank (OFBank) was in fact the first to obtain BSP digital banking licensebut it took a little longer to come to market because its license differs from other digital-only banks or neobanks, which operate under a rural banking license that adheres to a different set of rules.
Since commencing its banking operations in June 2020, the digital bank owned by the Land Bank of the Philippines (LANDBANK) has continued to introduce a wider range of products and services. This may be partly due to its unique positioning, as it does not target consumers or businesses, but rather Filipinos based overseas to meet their local banking and remittance needs.
To this end, overseas Filipinos can send remittances in several ways, including direct transfers via GCash or Paymaya e-wallet, Visa Direct, from overseas remittance centers, or from a foreign bank account. OFBank aims to meet the savings and Digital Loan Needs of Overseas Filipinosincluding offering Visa debit cards linked to peso savings accounts.
OFBank also offers loan programs to overseas Filipinos seeking to reintegrate in the Philippines, as well as corporate financing for “capital formation or operational expansion,” facilitated by its parent company LANDBANK. OFBank is also the only one among the current digital banking players in the Philippines to offer securities investments among its products, with the option to invest in major government bonds and treasury securities, again enabled by LANDBANK.
UnionDigital Bank
UnionDigital is also an offshoot of a well-established historical operator, this time UnionBankUnionDigital, the Philippines’ ninth-largest bank by assets, claims to be one of the fastest digital banks in the world to achieve profitability, with triple-digit growth in the first half of 2023 compared to the previous year.
UnionDigital claims PHP20 billion in deposits and PHP13 billion in loans by mid-2023, as well as three-quarters (75%) of the lending market share among the six BSP-licensed digital banks. In addition to its robust loan and savings portfolios – where its primary savings account earns up to 4% interest per annum and its term deposit earns up to 6.75% per annum – UnionDigital is actively working to establish partnerships with players from various key sectors to launch integrated banking products and services, such as bill payment capabilities.
UNO Digital Bank
Meanwhile, digitally native UNO Digital Bank has also established strategic partnerships to increase its product presence, highlighting collaborations with companies such as GCash, Trusting Social, and Brankas. Brankas enables funds to be sent from the UNO savings account to universal banks such as UnionBank and Bank of the Philippine Islands (BPI), while Paynamics is building a network of physical and virtual recharge channels, including 711 and True Money.
Additionally, Bayad offers bill payment features, including for water, telecom, and electricity, among others. Like several of its digital counterparts, UNO has a physical debit card issued by Mastercard. Alongside this, UNO offers the basic digital banking products including a savings account with an attractive interest of 4.25% per annum credited daily, fixed deposits with interest rates of up to 6.50% per year, and personal loans up to PHP 200,000 with low interest rates of 1.79%.
GoTyme Bank
Unlike others, GoTyme has the unique positioning of more than 200 physical kiosks that function as physical touchpoints, allowing for expedited opening of savings accounts and even the issuance of free physical debit cards in five minutes, according to the bank’s co-CEOs. Funds transfers between GoTyme accounts are free, but interbank transfers are also free up to three times a week, which is not common.
GoTyme offers a fixed interest rate of 4% per year for its savings account, as well as the ability to create up to five separate goal-based savings pockets, called Go Save accounts. And through a partnership with PayMongo payment gatewayGoTyme can now improve access to loans for small and medium enterprises (SMEs) up to PHP 500,000.
Mayan Bank
Maya Bank is the digital banking arm of Voyager Innovations, Launching alongside Maya e-wallet At the same time, it changed its name to PayMaya. Maya Savings, operated by Maya Bank, Inc., offers retail customers savings with an interest rate of 4.5% per annum. When it launched, Maya Savings offered an introductory interest rate of 6% per annum to early adopters.
Maya Savings Accounts with PHP 100,000 deposited will be eligible for a daily interest rate of 14% per annum, while Time Deposit Plus Accounts offer a guaranteed rate of 3.5% per annum that can rise to 6% per annum upon reaching the target maturity date and amount. Maya Bank’s Goal-Based Savings product also offers between 4% and 6% interest per annum, but on a monthly basis.
Maya Bank also offers a business deposit account, which can make transfers in real time. using PesoNet and InstaPayat a commercial deposit interest rate of 2.5%. which, according to the digital bank, is 20 to 25 times higher than what traditional banks offer in the Philippines. Maya further offers personal loans and lines of credit, with much lower requirements for personal credit, while personal loan requirements are slightly stricter, but can qualify customers for up to PHP250,000 instead of the PHP30,000 maximum for the line of credit.
Maya Bank is also one of only two digital banks in the Philippines that offer BNPL products, called Maya Pay in 4, which allow users to pay in four equal installments for items purchased from participating merchants. However, the digital bank says it has suspended this product for now, but it is expected to return in the future.
Featured Image Credit: Edited from Freepik