Riding on wave of change in banking
The COVID-19 pandemic has changed practically everything about how we live, work and even play.
The banking sector has been upended, too, with quarantine restrictions leading to an explosion in digital transactions as more Filipinos become more comfortable with conducting their financial affairs online. Indeed, the banking sector will not be the same again.
Here, Hans B. Sicat, country manager and managing director of ING Bank Philippines, shares his thoughts on where the banking industry is right now and what further changes are in store for the sector in the Philippines.
Question: Can you give us a picture of the banking sector right now in terms of penetration?
Based on the 2019 BSP Financial Inclusion Survey, majority of Filipinos remain unbanked. If we’re looking specifically at savings, over half of the population save their money, but unfortunately, not a lot save their money in a bank with their own savings account.
The same survey also showed that those with savings stored in a bank account for only 21 percent of the population—which is already a 3 percent increase from what we had back in 2017. Having said these, there’s a huge opportunity for us to boost financial awareness among Filipinos and help them own a bank account and build a savings mindset.
Q: Given the low number, what do you think are the main reasons that have long prevented more Filipinos from securing a savings account?
In the same Financial Inclusion Survey from BSP back in 2019, we also found out that a lot of people also do not have access to the documents needed to open a bank account. We’re hopeful that the implementation of the Philippine National Identity Card would help with this concern.
Awareness and education on the use and benefits of the bank account can be useful. But more importantly, we see that account opening process and requirements, such as minimum opening or maintaining balance, could be bigger deterring factors. For others, the financial jargon and fine print could also be psychological barriers for many to start engaging with financial services.
Recognizing these challenges, we at ING committed ourselves to build a smart, easy and personal banking experience for our customers.
Q: For ING, how does it hope to increase that penetration rate?
At ING, we make banking easy and accessible—it’s 100 percent mobile-only with just one ID. All you need is your device and internet connection to download the app. We’ve ensured that our mobile app interface is user-friendly, with clear and easy steps to guide customer through the process.
Back in 2018, we knew that we could make a difference in the market by encouraging financial literacy and wellness through a strong savings habit. Allowing customers to have a savings account was the starting point. To support many Filipinos who currently do not have a savings account or find it difficult to maintain a regular savings habit, the ING Save does not require a minimum amount to open and no maintaining balance. We also do not charge any fees.
In 2020, we further expanded the range of digital services that are accessible via the ING mobile app by rolling out the electronic bank statement generation and adjustable daily transfer limit features.
We have also announced that we will be launching our consumer loan product in 2021.
Q: The pandemic has spawned a rapid shift to digitalization and many of the big banks have also set up their own digital presence. How will a bank like ING then compete against these more established banks?
There is no doubt that the COVID-19 pandemic really encouraged customers to adopt digital payments and banking, as mobility is restricted and contactless methods are the way to go.
At the same time, we see a stronger consciousness among people on the importance of savings, and spending on essential items via e-commerce platforms.
For ING, we are fortunate to have started with a mobile-first strategy since day one—this allowed us to help many Filipinos overcome the community quarantine restrictions.
We know the importance of accessibility when it comes to financial matters. Hence, we believed that the future of banking is mobile, especially in the Philippines where mobile phone penetration is high. Instead of relying on physical branches with standard opening hours, we make sure that our customers can access their ING bank accounts 24/7, via their mobile phone.
Q: People say that a 4-percent interest rate is too good to be true considering that the prevailing rate is not even 1 percent, how can you afford to give that?
For us at ING, we had no doubt about adopting a mobile-first strategy despite having no precedence in the Philippines back then.
We saw how people are becoming more mobile and we know that for banking to be relevant, we need to fit their lifestyle.
Taking this mobile-only approach enhances the banking customer experience and allowed us to offer a fair value to our customers with higher savings interest rates, no transaction fees, and no fees to open an account.
This approach also allowed us to keep lower operating costs compared to banks with brick-and-mortar branches.
We also made innovation in the way we service our customers—e.g. chat instead of calls and no ATM network to maintain. Instead our customers can leverage the ATM network at no fees. With the shift toward text messaging, we also decided not to have a call center and instead adopt a fully chat proposition for customer support. Hence, we believe that thinking out of the box, we can find new ways of servicing our customers that would provide a good experience and meet their needs.
Q: How do you see the economy performing this year? Will we ever get out of the woods?
There’s a lot to make up for in terms of economic recovery. Just last July, our senior economist Nicholas Mapa cut back his GDP (gross domestic product) growth forecast from 5 percent to 4.7 percent for this year. This is very much affected by the pandemic and vaccination rate in the country. The Asian Development Bank, World Bank, and the Philippine government have also lowered their growth expectations. Should twin deficits widen further, there may be possible downward revisions down the road.
Q: How will ING prepare for the inevitable rebound that will happen?
Maybe not this year, but it will happen.
We share the hope that the pandemic situation will be behind us soon.
But regardless of the situation, we do not stop innovating.
To make banking even easier and more accessible, we’re also working on new payment features as well as the launch of ING Loans, to add to our lineup of services and extend our ability to support our customers’ financial needs.
On our wholesale banking business, activities are still healthy, and we hope to continue playing an active role in supporting our clients in the journey towards more long-term sustainable business.
We are also focused on growing and our strategy is looking at post-pandemic growth opportunities. INQ
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