Digital Banking Revolution in the Philippines

Already viewed as one of the fastest growing economies in Southeast Asia, the Philippines is seemingly on the verge of a digital banking revolution.

According to a recent report by global management consulting firm McKinsey & Co., there remains mounting unmet demand for banking in the country as its banking penetration rate ranks among the lowest in the region at 56%. This is significantly low when compared to Thailand’s highest rate of 96% and that of 88% in Malaysia.

So far, Bangko Sentral ng Pilipinas’ (BSP) steps to address this have included lowering the requirements to open bank accounts, the introduction and issuance of new digital banking licenses, the creation of a real-time payment system, and the establishment of a standardized QR network.

The Philippines’ central banks’ reforms are also seemingly geared at targeting foreign entrants as limits on foreign ownership, national hiring quotas, and data localization requirements have been significantly relaxed.

The market is wide open

Given the rapid growth of the country, the increase in financial inclusion, the entry of new players, and growing demand that will always need to be met, experts project banking revenue will grow at a compound annual rate of about 10 percent.

While operating at scale, domestic payments services such as GCash and Maya have begun expanding their offerings to go beyond payments. Traditional local banks, on the other hand, are already investing in their digital propositions in an effort to retain their consumers that have also begun moving to digital.

Digital banks have also begun to test the market. Yet, there presently is still no clear leader in the purely digital segment, and consultancies like McKinsey & Co. maintain that the market is wide open for both local and foreign entrants.

Filipinos’ unique (cross-border) banking needs

The digital banking industry is indeed one that presents a great deal of opportunity for different financial institutions in the Philippines, especially with Filipinos also having some rather specific banking needs—a couple of which are highly dependent on transacting overseas.

Receiving remittances from abroad

Among the ways which many Filipinos earn for their families is working overseas, and according to the latest data from the Philippine Statistics Authority (PSA), there were 1.83 million Overseas Filipinos in 2022.

They, in turn, were responsible for $36.14 billion worth of cash remittances to the Philippines in 2022. According to the BSP, those inward remittances were a 3.6% increase from the previous year, and accounted for 8.9% of the Philippines’ gross domestic product.

As these transactions continue to be vital both to the individual families of Overseas Filipinos and the economy overall, it is beneficial that Filipinos overseas and at home have digital banking tools that can make sending and receiving convenient and less costly.

According to a recent Social Weather Stations survey, 7% of Filipino households are home to at least one person working overseas, and is a number likely to double as 7% of adult Filipinos have also expressed a desire to work abroad. Given the growth of this particular segment, cross-border services and solutions is the logical next step in the Philippines’ digital banking revolution.

Working remotely

Filipinos transacting across borders and time zones are not limited to those working overseas. There is now also a growing part of the workforce making a living via flexible working arrangement with employers located overseas.

Prior to the Covid-19 pandemic, remote work, at least in the Philippines, had been largely unheard of. However, as restrictions to help curb the spread of the virus were put in place, both employers and employees had to adapt to working from home.

As it has proven effective when it comes to saving time and money, and even increasing productivity, working remotely has now been accepted as the norm. At the very least with employees.

In fact, according to the Ernst & Young (EY) 2022 Work Reimagined Survey, 40% of respondents from the Philippines say they would like to work remotely more than five days a week (essentially the entire work week), while only 20% prefer four days a week, 24% three days a week, 12% two days a week, 2% once a week and only 2% want to return full-time to the office.

As not all local employers offer remote work arrangements, many of the Filipino professionals with a preference from working outside the office have turned to employers outside the country offering the opportunity to work from anywhere.

And now that Covid-19 restrictions have been completely lifted, Filipino “digital nomads” are not only working from home, but essentially traveling as they work and visiting both local and foreign destinations.

As the nature of their work and travel can involve transactions made outside of the Philippines, being able to transact freely across different locations and different currencies is a considerable necessity, yet one that can’t be filled by local digital banking at present.

Black Banx for the Global Filipino

Whether making a living overseas, doing so locally but with an employer abroad, or making the most of the renewed opportunities to finally travel again, Filipinos have increasingly gone global, and so have their banking needs.

Committed to unlocking a borderless financial system for everyone where money can flow freely, Black Banx is a financial institution arguably in the best position to fulfill Filipinos’ unique digital banking requirements.

Designed for both individual and business use, Black Banx offers account services that are ideal for overseas Filipinos and foreign employers to transfer money to the country, and for locals to also receive these payments:

  • Hold funds, send and receive payments across 180 countries and in more than 28 different currencies
  • Real time 24/7 currency exchange

With three-quarters of the population having internet access and mobile penetration is nearly universal in the country, digital banking services like that of Black Banx is also a viable option for the “unbanked” individuals in the country that cannot access the services of traditional banks and those who simply want to fully embrace the digitalization of their banking.

Along with the ease in making transactions between the Philippines and other countries, Black Banx’s suite of services also include ways for Filipinos and their families to grow their wealth and make their finances better managed and more flexible:

  • Private and business group accounts in 28 FIAT and 2 crypto currenciesDebit Cards (virtual or physical) in different currencies
  • Real time 24/7 crypto trading services
  • Interest bearing savings accounts in EURO, USD, GBP, JPY

While Black Banx’s financial services and solutions are comprehensive, the no-fuss approach of opening an account ensures every Filipino becomes a fully-banked Filipino. To get started, all that is required is a valid photo I.D., a smartphone, and a reliable internet connection.

Additionally, Black Banx develops and maintains strong relationships with the leading banks in the world. This best ensures the safety of the funds of its customers as the money of Black Banx customers is never held in one singular bank or country.

By segregating accounts across multiple locations, the highest level of protection is provided as customers’ funds are globally diversified and enjoy the security of multiple jurisdictions. This is particularly beneficial to Filipino customers who only have access to smaller municipal or rural banks that, unfortunately, are often at risk of closure.

Indeed, like other countries, Filipinos have banking requirements that are unique to their socio-economics. And while the local digital banking industry is adapting to these needs quicker than ever they ever have, the evolution is just much more rapid, making the entry of Black Banx a significant plus to the local digital banking industry.