The next decade will likely witness a more profound transformation of the banking industry than anything seen in the past century—a seismic shift fueled not only by technological advancements but also by a convergence of demographic, socioeconomic, regulatory, and environmental factors.
At best, we can thus anticipate a future characterized by longer life expectancy, greater job mobility, a thriving sharing economy, better health, improved access to wellness services, heightened environmental awareness, and more financial prosperity. These factors will converge to redefine how we work, live, play, and manage our finances. Banks of the future will leverage these transformations to further enhance their customers’ financial well-being, helping them meet their financial obligations, achieve financial independence, exercise financial control, and maintain financial security especially in challenging circumstances.
Briefly, following are key areas that financial service providers must focus on to deliver financial resilience: data, which customers will increasingly leverage to extract greater value from products and services while demanding enhanced security and transparency regarding their usage; business models that will thrive on the foundation of widely accessible data, propelling the emergence of new entrants, while leading banks explore complementary business opportunities beyond their core offerings, thus expanding their business models; regulation, which governments and regulating bodies must re-create to identify and manage evolving risks; and technology, which is arguably the primary driver of change, as it transforms both the services offered and the methods of delivery and consumption.
To succeed, leading banks must prioritize all of these business aspects—not separately, but as integrated elements that together will redefine the bank-customer relationship in the foreseeable future.
Digital banks save the day
The Philippines is fertile ground for digital banking solutions. Increased smartphone penetration and internet usage can now bring mobile banking services and the ease of digital wallets to its sizeable unbanked and underbanked population. Today, more and more consumers can enjoy convenient and secure ways to manage their finances. Now more than ever, digital platforms have the opportunity to bridge the financial gap—a prospect that aligns perfectly with GoTyme Bank’s vision of unlocking the financial potential of all Filipinos.
One only need look back to how e-wallets and mobile banking helped save lives and livelihoods in the dark days of the COVID-19 pandemic. PayMaya and GCash, two prominent e-wallets in the Philippines, played a pivotal role in mitigating the economic impact of the pandemic by helping individuals and businesses navigate the challenges of lockdown and social distancing. They also contributed significantly to the overall economic recovery by enabling contactless transactions and enhancing convenience.
In so doing they made financial services more accessible to previously underserved populations, including those in rural areas and those with limited access to traditional banking. These platforms provided a convenient and cost-effective way for small businesses to accept payments and manage their finances, especially during such times of economic uncertainty. They also spurred digital commerce, providing a lifeline for businesses that were forced to adapt to the “new normal.” As the pandemic accelerated the adoption of digital technologies, these platforms were at the forefront of innovation, offering new features and services to meet evolving customer needs.
Their success paved the way for the establishment of digital banks in the country. In 2020 to 2021, the Bangko Sentral ng Pilipinas granted digital banking licenses to GoTyme Bank, Maya Bank, Overseas Filipino Bank, Tonik Digital Bank, UnionDigital Bank, and UNO Digital Bank.This was a crucial step forward in expanding digital financial services and pushing innovation in Philippine banking.
Digital banking is here to stay—for good, to be sure—and this once-in-a-lifetime scenario offers a unique opportunity for banks to double down on financial inclusion and sustainability, and be a force for good.
Benefits beyond banking
The conveniences digital banking offers are well documented. It frees you from the constraints of traditional banking hours and empowers you to manage your money on your own schedule. Advanced features like bill payment, peer-to-peer transfers, and ATM location services make daily money management a breeze. Some institutions even offer in-app chat with customer service representatives, ensuring you have access to support when you need it most. Customer information safety is taken seriously, hence the use of robust security measures like multifactor authentication, biometric logins, and advanced encryption by leading digital banks.
Going beyond the day-to-day tasks, digital banking empowers you to take charge of your financial well-being. User-friendly budgeting tools and spending trackers equip you with the insights you need to make informed decisions. Digital banking fosters financial literacy and paves the way toward a more resilient financial future.
Expanding the economy toward greater inclusion has become the driving force of digital banks and fintech companies in the changing world.
The US’ Quontic Adaptive Lending and the Philippines’ GoTyme Merchant Cash Advance with PayMongo are two examples of how these digital banking platforms are innovating lending solutions for micro, small and medium enterprises (MSME), which play a crucial role in many economies across the world by providing jobs and stimulating economic growth.
Quontic’s adaptive lending leverages AI and machine learning to assess a business’s real-time financial health and risk profile. This allows for more flexible and responsive lending decisions, tailoring loan terms to the specific needs of each MSME.
In 2023, GoTyme Bank partnered with PayMongo Philippines Inc. to expand financial inclusion among MSMEs. Through this partnership, GoTyme introduced Capital, a groundbreaking business capital loan designed specifically for PayMongo merchants and accessible via the PayMongo dashboard. Capital offers a simple, three-step digital application process that can be completed in minutes. Once approved, funds are disbursed within a single business day, providing MSMEs with the timely financial support they need to grow and thrive.
We’re well aware that traditional banking processes can often be cumbersome and time-consuming for MSMEs. That’s why GoTyme streamlined the application process and eliminated unnecessary documentation. By leveraging the data and insights from PayMongo’s platform, GoTyme can assess creditworthiness efficiently and provide tailored financing solutions.
Capital’s flexible repayment structure is another key advantage. Instead of imposing fixed monthly payments, we align repayments with the business performance of our customers. This ensures that MSMEs are not burdened by excessive debt during challenging economic times.
We at GoTyme Bank believe that this partnership represents a significant milestone in our journey to become the preferred banking partner for MSMEs in the Philippines. By providing accessible, affordable, and flexible financing solutions, we are empowering these businesses to reach their full potential and contribute to the nation’s economic growth. Best of all, the more the MSME does business with us, the bigger the credit we are able to make available to the MSME customer.
Exciting times ahead
Across the world there are signs that things are about to get even better. Already, Tandem (UK), N26 (Germany), and Starling (UK) are showing how digital banks or neobanks can offer a wide range of innovative financial services beyond traditional lending.
Tandem Green Investment allows customers to invest their savings in sustainable and ethical projects, such as renewable energy and sustainable agriculture. This provides a way for individuals to contribute to a greener future while earning a return on their investment—an excellent example of creating shared value by promoting sustainable development.
N26 offers a range of insurance products, including travel insurance and gadget insurance. This provides added protection for customers and simplifies the process of obtaining insurance coverage.
Starling Bank has a feature that allows parents or guardians to open savings accounts for their children. This encourages financial literacy from a young age and helps children develop good saving habits.
All these show the power of digital banks and fintech companies to improve on the prevailing traditional financial industry by offering more personalized, convenient, and creative financial solutions to a wider range of customers, including MSMEs—thus doing wonders for financial inclusion and empowering small businesses.
Financial inclusion spurs social development. By expanding access to banking products and services like payments, savings, credit, investment, and insurance, digital banks can empower individuals and communities to improve their lives.
The opportunities for financial inclusion are immense, and digital banks are uniquely positioned to seize them. They can leverage groundbreaking technologies to serve the underserved markets at scale. By offering affordable, accessible, and personalized financial solutions, digital banks can bring millions of people into the formal financial system, unlocking their potential and driving economic prosperity.
