Cash management yet to take root in digital space

Like in previous crises, the COVID-19 pandemic has boosted demand for cash management services (CMS) as enterprises strive to operate more efficiently amid lockdown protocols, but bulk of transactions are still physical in nature and require brick-and-mortar or branch network services.

This is according to Carlo Nazareno, head of CMS at BDO Unibank, who said in an interview with Inquirer that to help corporate clients manage liquidity amid quarantine restrictions, BDO has given them the option to collect money and pay suppliers and employees using online banking channels.

Nazareno noted the CMS business in the country was still predominantly physical, which meant transactions were done in bank branches. Clients still write checks, collect and pay in cash or checks and deposit money in cash or checks, he said.

“About 75 percent of my business is physical cash management,” Nazareno said.

For those with big CMS requirements, BDO recently introduced its cash deposit machine (CDM), which can be used by corporate clients to deposit cash at their sites or premises, serving as alternative to the cash and check pick-up services. Cash deposited via CDMs is credited that same day. This pandemic, the volume of physical processing of cash declined significantly. Nazareno noted that in January 2021, for instance, the volume of industry-wide check payments declined by 31 percent year-on-year because people could not move around.

On the other hand, the volume of transactions at PesoNet, which is used by institutions to transfer funds, increased by 293 percent year-on-year while transaction value grew by 114 percent.

In terms of absolute value, however, he noted that transactions were still mostly physical. People were now just starting to feel comfortable using electronic channels, he added.

“Unfortunately, you need something as drastic as COVID-19 to help clients migrate from very inefficient expensive cash management service to more efficient cheaper electronic services,” Nazareno said. But in order for the Philippines to become a truly digital country, Nazareno said there was a need to upgrade infrastructure nationwide, not just in Metro Manila. This means having better access to internet and mobile signals alongside changes in the reporting systems of government agencies like the Bureau of Internal Revenue.

Many government agencies, to date, still require physical official receipts, invoices and documentation as proof of payment. INQ