5 Best Fully-Digital Banks in the Philippines

With the current pandemic we are facing, we want services that can limit interaction with other people. In the case of banking, there are already fully-digital banks in the Philippines that let you access banking services without leaving your home.

If you have a bank account, you may have already encountered the words online banking, mobile banking, digital banking, and got confused if they are the same or not. Or you may have thought why are they using these different terminologies if it means the same. 

These three words are not exactly the same and I’m going to discuss each of them in this article.

But I will focus more on digital banking because they are very popular right now and it seems like every bank wants to transition into this new trend. 

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The difference between online banking, mobile banking, and digital banking

Online banking

A service that allows a customer of a traditional bank (these are your BPI, BDO, Metrobank, or any that has a physical branch) to do basic banking transactions such as checking account balance, funds transfers, and bill payments over the internet. 

This is usually done through the bank’s website using a PC or a laptop. The user needs to register first on the bank’s website to obtain a username and password. 

Mobile banking

This is much the same as online banking but instead of accessing the services through the bank’s website on a PC or laptop, you use the bank’s mobile application on a smartphone or tablet.

The key difference between the two aside from the device used to access them is that online banking has a more comprehensive function. Mobile banking just gives you the basic but can come in handy especially if you’re on the go. 

Digital banking

It means that all banking transactions are being done online through a smartphone app. From account opening, sending of requirements, and all the services available on online banking and mobile banking combined. It doesn’t have physical branches or bank tellers you can talk to face to face, it’s entirely digital. 

There are currently five fully-digital banks in the Philippines. 

1. CIMB Bank Philippines

Established in December 2018, this digital bank is a member of CIMB Group, a Malaysian universal bank that is present over 16 global markets.

Currently, they offer five products:

1.1 Upsave account

Initial Deposit: No initial deposit required

Maintaining balance: No maintaining balance

Balance to earn interest: Php 0.01

Interest Rate (Per Annum): 3.00% (for account holders with a balance of Php 100,000, 4.00% interest will be applied until July 31, 2020)

Free Life Insurance: For depositors who maintain P100,000 Average Daily Balance for one month (coverage is renewed on a monthly basis) Coverage is 1x of the ADB  up to a maximum coverage limit of Php 1million

1.2 Gsave Account (tied with Gcash)

Initial Deposit: No initial deposit required

Maintaining balance: No maintaining balance

Balance to earn interest: Php 0.01

Interest Rate (Per Annum): 3.10% (for account holders with a balance of Php 100,000, 4.00% interest will be applied until July 31, 2020)

Free Life Insurance: For depositors who maintain P100,000 Average Daily Balance for one month (coverage is renewed on a monthly basis) Coverage is 1x of the ADB up to a maximum coverage limit of Php 1million

1.3 Fast & Fast Plus account (with free ATM debit card once you accumulate P5,000 account balance)

Initial Deposit: No initial deposit required

Maintaining balance: No maintaining balance

Balance to earn interest: Php 0.01

Interest Rate (Per Annum): 0.50% (0.75% interest once you upgrade your account to Fast Plus account)

1.4 Fixed-term loan

Interest: 0%

Loan tenure: 12 months

Loan amount: P30,000 to P50,000

Processing fee: 5% on the approved loan amount 

1.5 Personal loan

Interest: 1.12% to 1.95% per month (subject to credit score rating)

Loan tenure: 12 to 60 months

Loan amount: P30,000 to P1,000,000

Processing fee: None

2. ING Philippines 

Established in the 1990s in the Philippines as a wholesale bank, ING Philippines launched its all-digital bank via mobile app in early 2019. ING is a global bank that operates in more than 40 countries across Europe, Asia, and the Americas.

Currently, they only offer 1 savings account product:

Initial Deposit: No initial deposit required

Maintaining balance: No maintaining balance

Balance to earn interest: Php 0.01

Interest Rate (Per Annum): 4.00% for accounts that have a balance below or equal to PHP 10,000,000 and 1.00% for the balance above Php 10,000,000 (please note that these rates only apply until July 31, 2020, we’ll update it once new rates are available)

 

3. DiskarTech by RCBC

RCBC, the banking arm of the Yuchengo Group of Companies (YGC), has already joined the Digital banking space with the launch of DiskarTech App. It aims to provide “sachet banking services” to millions of unbanked and underserved Filipinos. Their digital savings account offers:

Initial Deposit: No initial deposit required

Maintaining balance: No maintaining balance

Balance to earn interest: Php 0.01

Interest Rate (Per Annum): 3.25%

The app’s services also include bills payments, telemedicine, purchase of airtime load and gaming pins, QR code transfers, among others. More services will be introduced soon, such as microinsurance and skills marketplace for enterprising Filipinos.

4. Komo by EastWest Bank

East West Banking Corporation, the 11th largest bank by assets in the country recently got the approval of Bangko Sentral ng Pilipinas (BSP) to launch its fully-digital bank, Komo. It will be offered through its fully-owned subsidiary, EastWest Rural Bank,  sometime in Q3 of this year.

Initial Deposit: (no information yet, we’ll update this once it is available)

Maintaining balance: No maintaining balance

Balance to earn interest: (no information yet, we’ll update this once it is available)

Interest Rate (Per Annum): 3.00%

5. TONIK Digital Bank Inc.

Founded in 2018, TONIK recently received the first digital-only banking license from the Bangko Sentral ng Pilipinas (BSP) in January 2020. It is a subsidiary of Singapore-based TONIK Financial Pte. Ltd. and will officially launch in the third quarter of 2020.

Based on its website, TONIK will focus on providing simple consumer payment, savings, and borrowing solutions, delivered through a smartphone app. 

Special mention

 

Union Bank of the Philippines (UnionBank)

Awarded as the Best Digital Bank in the Philippines for 3 straight years from 2017 to 2019 by Asiamoney, UnionBank deserves a spot here. Though started as a corporate bank, they are ramping up in introducing new innovations and technologies to become a digital bank.


Their digital transformation started in 2016 when they launch EON – the first selfie-banking in Asia that uses facial recognition technology, which won as The Best Digital Bank in the Philippines at The Asian Banker Philippine Country Awards 2018.


Other key innovations they launch as part of their digital transformation are:

The ARK – the first fully digital bank branch in the country
Chatbot Rafa  – the country’s first banking chatbot
UnionBank Online – an app that allows customers to do all their banking transactions online including depositing checks by just taking a photo and upload it on the app. 

The Pros and Cons of Digital Banks in the Philippines

Pros

• Convenience – No need to go somewhere or to wait in a queue if you need to do banking transactions since you will be able to do it online on the bank’s website or through their mobile app.

• Higher Interest – traditional banks only offer 0.10%-2% interest rates, unlike digital banks that offer 2%-4%. This is due to lower operating expenses in running a digital bank.

• Lower to no fees at all –  almost all the digital banks we mentioned don’t charge transaction fees, minimum balance fees, and account closure fees. 

• Eco friendly – since digital banks fully operate online, it limits the use of papers, electricity in running physical branches, and it can even save you gas since you’re not required to go to a physical bank anymore. 

Cons 

• Cybersecurity issues – this is the biggest concern in using digital banks. Although they invest heavily in online security, no system is completely foolproof. There will be instances of system glitches and threats from hackers that can result in identity theft, unauthorized transaction, and access to funds. 

• Internet connectivity – aside from being one of the countries that have the slowest internet speed in Asia, a lot of places in the country still don’t have an internet connection. This is a big challenge to digital banks in the Philippines especially if someone needs to do banking transactions when traveling to far-flung places. 

• No ATMs – Digital banks don’t have their own ATMs. Since we are not yet a cashless society, a lot of our transactions still need that physical money. If you need to withdraw cash, you need to transfer it to your bank account that has a debit card or cash out at their partner merchants (which is not quite accessible).

Do we need to shift into these Digital banks and leave the traditional way of banking?

My answer is, it depends on your needs. Though digital banks in the Philippines can give you convenience and higher interest rates, there are financial products that only traditional banks can provide, or at least for now. These are car loans, business loans, home loans, credit cards, checking accounts, and investments. 

You can try to put some of your savings (emergency fund) into digital banks, maybe half of it if you’re not comfortable yet. I already closed my passbook account from “You deserve better” bank and put all my savings into CIMB’s Upsave account. In which I receive a higher interest per month that it can already pay my monthly Spotify subscription fee.

I also suggest that you should try digital banks because traditional banks might shift all their services into digital in the near future, like what UnionBank is doing. So at least by then you already have a grasp on how to bank fully-digital.