In terms of purchasing power, inflation means that prices rise, and your money loses value. When there is a period of high inflation, such as now, you may want to reconsider how you manage your finances in order to help protect the value of your money. The more painful part for consumers as prices for goods and services continue to rise is that we don’t know how long it will last or how we should react financially. We may not be able to control the occurrence of inflation, but we can control our own finances until the economy returns to normal. One method of combating inflation is to invest or save your money in high-yielding digital banks.
These digital banks are a good place to start if you want high-interest savings accounts or an easier and faster banking experience. “Digital banks will significantly contribute to the growth and development of the digital financial ecosystem, catalyzing the achievement of financial inclusion and digital transformation goals,” said BSP Governor Benjamin Diokno in a virtual briefing on Tuesday. “The BSP continues to enhance regulations to promote a secure environment for digital banks,” he said, adding that these measures include amending Information Technology risk management policies, particularly on the implementation of automated and real-time fraud monitoring and detection systems.
Maya Bank, Overseas Filipino Bank Tonik Digital Bank, UNOBank, Union Digital Bank, and Gotyme have been granted digital banking licenses by the Bangko Sentral during the year 2021. In line with this, the central bank hopes that digital banks will help it achieve its goal of converting 50% of total retail transactions in the Philippines to digital and increasing the number of Filipino adults with bank accounts to 70% by 2023.
What are Digital Banks?
Digital banks, according to the Bangko Sentral ng Pilipinas, are lenders that only provide financial products and services through an online platform. It means that digital banks do not have physical locations where account holders can conduct transactions. Its entire set of processes, products, and services are only available online. In other words, there is no need for human intervention because everything is automated using cutting-edge technology and data to improve the overall customer experience. This is distinct from online banking, which, while providing access to bank functions via the internet, retains some, if not the majority, of the traditional processes.
Digital Banks VS Traditional Banks
To ensure the security of both the client and the bank, traditional banks require face-to-face interactions for certain services. Digital banks, on the other hand, automate these processes and provide a secure, end-to-end online banking experience. Also, the interest rate you can earn on your savings is a significant difference between the two. Online banks frequently offer high-yielding savings accounts with no monthly maintenance fees or minimum deposit requirements. Traditional savings accounts, which provide the same security for your money but offer much lower yields, are more likely to be offered by physical banks.
Overall, digital banks eliminate manual processes and human intervention, allowing clients to manage their accounts entirely through an app or website.
1. Ease of Registration
As long as you have a smart phone and access to a stable internet connection, you can register and apply for an account. Creating an account with a digital bank has fewer requirements and less hassle. For starters, you don’t have to visit a physical bank to open an account. Everything is handled through the app or website. Account holders who are interested only need to fill out all of the required information and take a photo of their valid IDs. Some digital banks do not require clients to make an initial deposit, and some even have a zero-balance requirement.
2. Better Rewards and Rates
Online banks are excellent for earning high yields while having easy access to your money and not being subject to monthly fees or minimums. However, keep in mind that if you prefer the convenience of visiting a bank branch or even depositing checks or cash in person, an online-only bank may not be for you.
Because digital banks have lower operating costs, they can offer their services at lower interest rates. Unlike traditional banks, which only offer 1-2 percent on deposit accounts, digital banks can offer up to 3 percent. This provides you with more opportunities to grow your savings passively at a faster rate than other local banks.
3. Convenience for the User
One of the primary advantages of mobile and online digital platform is that it provides the user the ability to bank whenever and however they want. Our smartphones and computers are typically readily available, allowing us 24/7 account access to quickly complete a variety of banking tasks. Mobile banking apps, for example, allow you to deposit checks from anywhere.
At the same time, you can check your balance, transfer funds, and set up a notification to notify you if your account goes into overdraft, all without having to visit a branch. There is no need to wait in long lines because everything can be done within the app. You no longer have to rush through cut-offs because you can schedule bill payments or deposits at your leisure.
4. Full Control for the User
Consumers can benefit from digital banking in a variety of ways, including making their lives easier and becoming better stewards of their money. Unlike in-person banking, mobile banking apps and websites generally do not place restrictions on when you can perform banking tasks such as depositing a check or transferring money from one account to another.
Moreover, by creating pots of cash to stash away money each month, digital banks allow you to spread the cost of occasional purchases. This way, you’ll have money set aside to cover these types of expenses when they arise, avoiding the need to use credit cards. Some digital banks even allow you to lock your pot to prevent yourself from accessing it.
5. Secure and Safe
As mentioned above, Digital banks such as ING and CIMB are regulated by the Bangko Sentral ng Pilipinas (BSP), so you don’t have to worry about dealing with shady organizations. While also, the deposits from account holders are insured by the Philippine Deposit Insurance Corporation (PDIC).
Digital banks are built to be resistant to cyber-attacks. A password log-in, regular password changes, fingerprint scans for logins or transactions, and a one-time PIN (OTP) for each log-in and transaction are among their security practices to prevent theft. For added control and security, digital banks allow customers to lock their cards, block online transactions, and manage card limits. Furthermore, All transactions are also closely monitored, as banks can keep a record of your entire history and retrieve it when necessary.
Digital Banks are the Future
Digital Banks will surely be part of our progressive future as it continues to redefine the future of banking around the world. According to a recent finder.com report, digital-only banking penetration in the Philippines is expected to double in the next five years, with 36 percent of Filipinos, or approximately 26 million people, having a digital-only bank account by 2026.
Bria Homes also adapts to a digital future as they penetrate real estate digitization allowing access for every Filipino around the world. Read more here: Bria Homes leads real estate digitalization, making them accessible to all OFWs this pandemic.