Unbanked Pinoys Will Decrease 20% As More People Adopt Online Banking

MANILA, Philippines – The unbanked and underbanked segments in the Philippines are expected to decline to 20% of the bankable population as more Filipinos are ready to go digital banking amid the pandemic, according to a study commissioned by the provider of Backbase solutions.

According to the second edition of the IDC Fintech and Digital Banking 2025 (Asia-Pacific) report, three in five or 60% of bankable Filipino customers are ready to move to more digital banks.

Backbase Regional Director for ASEAN and Southeast Asia, Riddhi Dutta, said the report highlighted the challenges facing banking and fintech players in Asia-Pacific and the Philippines amid the crisis. pandemic.

“To thrive in a post-pandemic world, organizations will need to keep their customers at the center by focusing on breaking down silos, delivering higher levels of convenience, overcoming financial literacy challenges and improving accessibility. to lenders and payment products. At Backbase, we are committed to equipping financial institutions in the Philippines with innovative banking models and experiences that will meet the changing needs of customers here, ”said Dutta.

For his part, IDC Financial Insights Associate Vice President Michael Araneta said organizations need to refocus their efforts to become even more client-centric and platform-centric as events of the past year have showed the resilience of the financial services sector.

“The information in the report will help banks, neobanks and fintechs identify key areas for investment for 2025 and beyond,” Araneta said.

The report says six of the top 10 banks in the Philippines are expected to launch their own digital banking brands in the market.

He said two digital banks in the Philippines have experienced significant growth and expect their customer base to grow by at least 80% every year through 2025.

Meanwhile, some fintech (FinTech) companies that had grown to sufficient size in 2019 have also been successful, gaining more market share than expected.

The study conducted in the fourth quarter of last year and the first quarter of this year showed that banks in the region are returning to the drawing board on their digital transformation programs.

The suitability of digital banking has been the key factor, with digital banks enjoying three times the growth in customer base compared to traditional banks.

In response, incumbent banks are relaunching digital transformation initiatives, having faced a growth of at least 50% in the number of digital transactions and interactions with customers.

The study indicates that organizations should undertake a complete realignment of customer engagement projects. He noted that digital capabilities are the key to resilience and victory in the race to recover from the setbacks associated with the pandemic.

“While the APAC banking landscape has seen the departure of some neo-banks and fintechs due to the challenges of COVID-19, the report predicts that we will see another 100 new challengers in the region by 2025,” says The report.

The latest edition of the report found that 60% of banks in Asia-Pacific would leverage artificial intelligence or machine learning (ML) technologies for data-driven decisions, up from 48% the year before.

As part of its three-year roadmap for the transformation of digital payments, the Bangko Sentral ng Pilipinas (BSP) has committed to raising the level of Filipino adults with bank accounts to 70% and the share of retail transactions completed via digital channels 50% by 2023.

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