• Manila going mobile



    I recently met with a business owner who drives to her local bank branch an average of fifteen times per week. Fifteen!

    Data suggests that she is not alone with the majority of Filipino banking customers currently opting out of mobile and online banking options, choosing to visit their local branches instead. IT firm Infosys conducted a survey of 1,000 APAC banking customers in 2017 which found that of all nations surveyed, Filipino customers were the most likely to make transactions at a bank branch as opposed to online. BPI President and CEO Cezar P. Consing said in August 2017 that roughly one third of the bank’s customers accessed the bank’s services electronically, which he pointed out was very high by Philippine standards but still lagging behind the APAC average of 50 percent.

    Visiting a bank branch is an unpleasant and time-consuming affair but most Filipinos see this as preferential to using online platforms. However, all the ingredients necessary are present for the Philippine penetration rate to surpass the APAC average should optimal platforms become available.

    The necessary ingredients are two-fold: a tech-savvy community and a strong need to find an alternative to the status quo. A 2017 survey conducted by Uber found that commuters in Manila spend an average of 66 minutes per day stuck in gridlock traffic and an additional 24 minutes on average searching for parking. Things don’t drastically improve when customers reach the bank branch, with 54 percent reporting that they are “annoyed” by long bank queues. This is clearly a strong motive for city dwellers to forego a trip to the bank.

    Meanwhile, it’s no secret that Filipinos are open to adopting new technology, spending more time on social media each day per capita than any other nation. People living in Philippine cities such as Manila are the most likely to lead the transition to online banking as these areas suffer the worst traffic congestion and have the highest level of smartphone and internet penetration. In developed markets in Europe, banks are currently focused on moving customers who access internet banking via desktops or laptops toward mobile banking. It’s highly likely that many urban Filipinos will leapfrog first generation desktop platforms and adopt mobile banking straightaway.

    Given Filipinos’ willingness to adopt new technologies and the apparent need for remote banking, why is the Philippines lagging behind APAC neighbors with regard to online banking? I think there are two main contributing factors: the mobile experience offered by many online platforms needs to improve and security-conscious customers are cautious of online platforms. Until recently, mobile banking platforms were typically clunky iterations of desktop versions squashed into the screen of a smartphone. The latest generation of mobile applications has made customer experience the utmost priority and is much more likely to win the affection of Filipino customers. With regards to security, Filipino and international banks alike have been investing heavily with the aim of alleviating customer fears.

    One process First Circle has implemented when on-boarding new customers is to send a test deposit to their registered bank account. We then require the customer to verify the value of the deposit before we transfer any more funds to the account. This simple process enables us to be positive that we are sending funds to the correct bank account. As the security of online banking platforms continues to improve, banks and financial institutions are likely to take the crucial step of transitioning more cautious customers onto online platforms.

    While banking customers worldwide will gain from advancements in online banking, the benefits will be particularly prevalent in Filipino cities where roads and bank queues are overcrowded. As banks and financial institutions continue to improve the customer experience and the security offered by mobile banking platforms, I think we are likely to see the Philippines quickly gain on the average APAC online banking penetration of 50 percent with strong uptake in mobile banking platforms.

    Fergal Mike Flood has worked for LinkedIn and cut-e, helping businesses across EMEA and North America to improve efficiencies with technology. Contact him at fergal.flood@firstcircle.com to discuss purchase order and invoice financing.


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