With digital transactions now considered as the new normal amidst the ongoing pandemic, it prompted financial institutions to fast-track their digital transformation.
Based on a recent survey conducted by IDC and Backbase, 60% of more than 1,000 individuals in the Asia-Pacific are likely to switch to a more digital bank — and the figures are relatively the same in the Philippines. According to a 2021 survey by Fico, 61% of 1,000 Filipino adults now prefer digital platforms as compared to those surveyed in 2020.
The Bangko Sentral ng Pilipinas (BSP) established new categories for banks and digital banking to support and improve the digital shift in the country. By doing so, the BSP aims to convert 50% of transactions to digital services and achieve its 70% goal of Filipinos with bank accounts by 2023.
Only recently, six (06) banks were issued with BSP licenses to shift towards digital banking. As several banks emerge due to digitalization, IDC and Backbase also said in the same report that the Asia-Pacific region will have at least 100 new financial institutions by 2025.
The same study also indicated that 38% of the conventional or brick-and-mortar banks’ revenues will be at risk by 2025 across the region, thus putting traditional banks in a difficult position while they find innovative, creative, and fresh offerings so they can compete in the current situation to retain and attract customers.
Elevating Banks’ Services for Customers
A global trend among financial institutions is fast becoming a trend and it is called Earned Wage Access (EWA) — a solution that started in the United States but is now seen around the world.
EWA enables employees to access their salary before payday and release their already earned wage with just a click of a button. It can be integrated and offered by banks to their corporate accounts so employers can incorporate it as an employment benefit for their employees.
How does EWA work? Through the EWA app, employees can easily see their current earned salaries. Then, if they want to have an advance on their wages, they can request it via the same platform. The requested amount will be transferred to the employee’s bank account as soon as it’s approved by the employer.
PayKey, a fintech company based in Israel, will be bringing this white-labeled solution to the Philippines this year. As it is not a loan, EWA will have no interest rate because employees will access and withdraw their own money. However, it has a fixed transaction fee at every withdrawal.
“Integrating EWA is a great way for banks to elevate their service offerings. This solution is not just innovative, but it will also help address the financial needs of employees in the Philippines. At PayKey, we hope we can aid banks to attract and retain customers as competition in the market gets tougher with the emergence of new financial institutions,” according to Roy Gabriel, Chief Innovation Officer and General Manager of PayKey.