The pandemic forced many businesses – from small and medium ones to conglomerates – to rethink their strategies and accelerate the move toward digitalization. It also tested capabilities to urge not just employees, but essentially, the customers to embrace new methods of engagement and interaction.
At the peak of the outbreak, e-commerce took on massive, high-speed growth, as people explored a safer and more convenient way of purchasing necessities. In fact, according to Statista, the Philippine e-commerce market is projected to reach US$20.18 billion in 2022 and is poised to grow more than 17 percent annually until 2025, indicating persistent online buying behavior.
The financial industry is among the sectors poised to benefit from this market development. During the pandemic, the financial industry saw a rise in the number of banked Filipinos, thanks to the emergence of digital banking that has gained ground amid electronic payments and digital financial services’ increasing volume and value.
According to Bangko Sentral ng Pilipinas data, 23 percent of the Filipino adult population is now banked, up from only around 13 percent in 2019 before the pandemic emerged.
Even more remarkable is the increase of banked Filipinos with e-wallet accounts, from a mere 8 percent in 2019, it has now ballooned to 36 percent. Reports say that the millennials and the kids from Generation Z, which comprise 70 percent of the Philippine population, are among the driving forces behind this e-wallet adoption. Not only are these e-wallets convenient and flexible, but they are also more accessible, with information on their accounts readily available.
Then some e-wallets evolve, offering more services and solutions for Filipino customers. One such is Maya Bank Inc., which recently integrated its all-in-one money platform under the Maya app, combining the best of e-wallet, crypto, and digital banking.
Maya offers an interest rate of as much as 6 percent per annum, higher than the interest rate of any traditional bank. Since its launch, it has registered one million subscribers in just five months. During the same period, it also achieved P10 billion worth of deposits.
Apart from Maya, five more digital banks have secured a license to operate from the Bangko Sentral ng Pilipinas, namely Overseas Filipino Bank Inc., UNOBank Inc., UnionDigital Bank Inc., Tonik Digital Bank Inc., and GoTyme.
The rise of digitization of banking in the country and its positive reception means that it is here to stay. According to a survey by recent finder.com, Filipinos with digital bank accounts will account for 33 percent of the adult population by 2027. On average, 34 percent of people worldwide will have a digital bank account within the next 5 years, up from an average of just 19 percent in 2022.
In the context of rising inflation, there is an opportunity for the banking industry to ramp up on, first and foremost, education and financial literacy. Without basic know-how on managing finances,
people are at risk of making wrong decisions on how and where to save and invest their money. This concept should be introduced in early childhood education, to provide for a strong foundation for money management.
Through an effective financial literacy program, Filipinos will be able to make sound financial decisions, avoid incurring debt, and achieve financial goals. Understanding how finances are ably handled is also a need that was highlighted during the pandemic, with people going through unexpected financial challenges triggered by health emergencies, job loss, and business shutdowns, among others. Those who were financially knowledgeable and prepared for any eventualities were able to survive and even thrived.
Aside from education, the government must also put in place a solid regulatory framework for the new technologies in the financial sector to reduce uncertainties and most importantly, protect consumer welfare. There are many Filipinos who are still trying to understand the basics of money management and might fall prey to con tricks in the guise of tech innovations.
At the end of the day, there should be a check and balance, with leaders in government and in the private financial sector going back to what matters most in espousing innovation- enhanced experiences for businesses and consumers that make lives easier and more productive.