Digital Banking

The Philippines’ Up-and-Coming Online and Digital Banking Services

In the Philippines, changing customer behavior and evolving market dynamics in the banking sector have led to increased demand and usage of online banking services in recent years.

Bangko Sentral ng Pilipinas (BSP) deputy governor Mamerto Tangonan shared during a virtual forum in August 2022 that online transactions had increased substantially since 2019, noting that at least 56% of bank account owners applied for an online transaction in 2021, a remarkable 29 percentage point increase from the 27% in 2019.

“That means more and more people are sharing the experience of online banking transactions where they can store money, move money and apply for a loan using their cellular telephone or gadgets,” he said.

At the same time, an evolving regulatory landscape and the advent of digital-only banking challengers have prompted incumbents to ramp up their digital capabilities to meet new online banking regulatory requirements but also close gaps in operating efficiency, as well as users convenience and accessibility.

BSP supervisory policy and research department director Maria Cynthia Sison said during the same forum that banks had become more aware of the need to go digital as it affected their long-term competitiveness. They’ve also had to adapt to new policies and reforms introduced by the central bank to facilitate and promote online banking, she noted.

The Philippines’ most popular online banking apps

These market shifts have ushered the emergence of a thriving online banking landscape that today comprises propositions from traditional banking institutions and new challenger banks.

For example, the Union Bank of the Philippines (UnionBank) is a domestic banking institution that has risen to prominence in the digital banking arena for being among the pioneers and earliest adopters of technological innovations including data science, artificial intelligence (AI), embedded banking and open finance.

The bank provides the UnionBank Online app which allows customers to open new accounts entirely remotely, manage their accounts and cards seamlessly, transfer funds, pay their bills, keep taps on their loan repayments, and more.

According to app analytics startup Data.ai, UnionBank Online is the Philippines’ sixth largest finance apps by iOS and Google Play downloads, as well as the fourth largest by active users across all devices.

UnionBank’s president and CEO, Edwin R. Bautista, told the International Bank in March 2023 that new digital account openings averaged almost 600,000 per year, while the running total from the beginning to the end of 2022 stood at 1.8 million.

Last year, UnionBank took home two major awards at The Asian Banker Excellence in Retail Financial Services and Technology Innovation Awards 2022, winning the Best Retail Bank in the Philippines award for the third consecutive year, in addition to the Best Digital Banking Services in the Philippines award.

UnionBank Online dashboard, Source: UnionBank

BDO Unibank, the country’s largest financial institution by total assets, is another incumbent that provides a popular online banking service. The BDO Digital Banking app, which allows customers to do transactions such as checking account balances, transferring funds, paying bills, and applying for loans, had the fifth largest active user base among all Filipino finance apps in April 2023, according to Data.ai, and recorded one of the industry’s highest user engagement rate in 2022.

BDO Online app, Source: BDO

Another banking incumbent worth mentioning is Bank of the Philippine Islands (BPI). The third largest bank in the country by total assets, BPI provides the BPI Mobile app which allows users to open an account in just five minutes, get an instant and detailed view of their accounts, send money in many different ways, pay their bills, manage their cards, access travel and digital lifestyle services provided by BPI partners, and more.

The latest version of the mobile app, which was released earlier this year, also comes with an AI-powered tracking and insights feature as well as mobile check deposits.

The BPI Mobile app is currently the second largest finance app in the Philippines by active users, and the third highest ranked finance app in the Apple App Store, according to Data.ai.

BPI Mobile app, Source: Google Play

Filipino up-and-coming digital banks

Digital banks are a newer type of banking service in the Philippines that have gained popularity in recent years due to their convenience and accessibility.

These companies operate over the Internet without any physical location; they are oftentimes cheaper than their traditional counterparts and usually provide their customers with greater control over their finances through self-service.

Digital banks also differentiate with their superior digital customer experiences and their use of advanced technologies to automate back-end operations, streamline loan application processes, and deliver personalized financial services, among many other applications.

In the Philippines, six digital challenger banks are currently in operation. These companies have all been launched over the past three years, and have gained considerable traction.

Maya Bank, which is owned by Voyager Innovations, gained one million customers and reached PHP 10 billion (US$180 million) in just five months after its public launch in April 2022.

The company operates Maya, a mobile app that integrates digital banking services powered by Maya Bank, such as savings and credit, with PayMaya’s e-wallet and other features like cryptocurrency, micro-investments, and insurance.

Maya is the second most downloaded finance app in the Philippines, as well as second most highest ranked finance app in the Apple App Store, according to Data.ai.

Maya app, Source: Maya

GoTyme, a joint venture between digital banking group Tyme and several entities under the Gokongwei Group, is another digital challenger bank in the Philippines that’s growing at a rapid pace.

The bank operates under an innovative “phygital” model, which combines physical touchpoints such as kiosks and bank ambassadors with a secure and convenient digital platform.

Launched in October 2022, GoTyme has managed to amass 250,000 customers in the span of just four months, GoTyme Bank president and CEO Nate Clarke said in an event February 2023. It’s now aiming to reach 10 million users by 2027.

The GoTyme Bank mobile app, which allows users to open and manage current and savings accounts, track their financial goals, access smart savings tools, send money as well as earn and redeem their rewards, is the eighth most downloaded finance app in the Philippines, and the third highest ranked finance app in the Apple App Store, according to Data.ai.