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Traditional Banking Is A Hassle, Will It Ever Get Easier?

The key is to go digital.
by Clara Rosales
Oct 9, 2020
Photo/s: Unsplash

Whether you like it or not, the pandemic has changed the way you approach your finances. Paying your bills online or via banking app is the new normal, and opting for online payments instead of cash-on-delivery is a safety precaution at this point. With nowhere to go and the economy struggling to recover, the worry over money is valid.

Even those who were not previously invested in their finances found themselves opening a bank account or a digital wallet, an integral part of “adulting.” Maneuvering bank forms and online sign-ups is scary, but it does beg an important question: Can banking and managing your money get easier, especially during the pandemic?

Customers can turn to online payment channels to settle their bills. Clara Rosales
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Navigating formal finance channels shouldn't be painful, said Pia Roman-Tayag, whose work as head of the Bangko Sentral ng Pilipinas' advocacy office required selling money matters to the public as a sexy topic.

“It’s sexy because it’s essential. It’s sexy because it is necessary for everyone to have it,” said Roman-Tayag said in a recent huddle with Summit Media Group journalists.

Traditional banking is intimidating

Opening up a bank account has several steps. You’d first have to go out of your way to go to a bank and dedicate at least a full working day to the errand as queues can run long. On top of that, lengthy forms have to be filled up before you can start saving.

Now it’s time for the dreaded part—presenting not 1, but at least 2 IDs. By this step, many individuals drop all attempts to open an account as procuring the additional documents and requirements to register for another ID card can take time. Statistics also reflect the public’s diminishing interest to keep their money in a bank.

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Only 29% or roughly three in 10 Filipinos have a bank account, said Joyce Suficiencia, Director of the Inclusive Finance Advocacy Staff of the Bangko Sentral. It's a jump from 23% in 2017. Bulk of the new accounts opened this year was brought about by the pandemic, where many saw the importance of keeping finances in check.

The National ID can be game-changer

On the policy level, the Bangko Sentral ng Pilipinas enforces KYC or know your customer. Banks translated this to two valid IDs to minimize the risk of forgery and identity theft.

While the 2-ID system has its purpose, it can repel Filipinos from having an account with a trusted financial institution. The national ID card, which the BSP is also in charge of printing, could change that altogether.

bsp national id
BSP Governor Benjamin Diokno III inspected the national ID printing machines earlier this week. Gov. Benjamin Diokno Twitter
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Most IDs come in the form of plastic cards you can slot into your wallet and pull out whenever needed. While the national ID will be a tangible object you can lug around in your pocket, it also doubles as a digital ID that contains more information.

“You don’t actually need to have a card in the future. You only need to have your PhilSys number. That can already be a proof of identity,” Suficiencia said.

The PhilSys, or Philippine Identification System, aims to be a centralized national ID system for the Philippines. Under this database, every Filipino will have just one national ID that contains all of the important information: name, birthdate, blood type, address, gender, and even biometric information such as thumbprints and iris scans.

Each physical national ID will come with a corresponding PhilSys number. Think of this as your DNA—no one else can have it and it is completely unique to you and you only. All you have to do is present your national ID or recite your PhilSys number and it’s immediate confirmation of your identity.

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With just one ID, or even just a string of numbers, you can open up a bank account without worrying about getting another ID. The existence of a centralized national ID system can also mean swifter and contactless distribution of aid to people who need it the most, especially during the pandemic.

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A bank account is the door to digital transactions

Having a bank account is a gateway to digital finance. Once you’ve set it up and you can rest easy knowing your money’s safe, the next step is maximizing services to either grow that money or easily pay for essentials, bills, loans, and even dream vacations.

Transacting over the counter is still an option, but with internet connections and smartphones making online banking a possibility, traditional bank account holders can access financial services at their fingertips.

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Portability was important then, but even more now, when you can’t freely leave the house to pay for bills, deposit savings, or withdraw cash.

unionbank app
Some banks have applications to streamline and simplify digital financial services. Clara Rosales

Despite the convenience of mobile applications and digital innovations, only 12% of mobile phone users with access to the internet use their gadgets for digital financial services.

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“A lot of those who don't use mobile transactions, mobile banking, and digital finance said that they're not aware of the functionalities of digital finance. They lack trust,” Suficiencio summed up.

And it makes sense: the idea is still fairly new and the country currently lacks the proper rails to properly implement digital financial services, be it in issues of connectivity, access to mobile devices, or ensuring safe and secure transactions. Many Filipinos feel they do not have enough money to save, while some individuals are completely in the dark about digital services.

Still, Suficencio and the BSP envision a Philippines that is financially inclusive.

Formal banking means financial inclusivity

Simply put, financial inclusion just means everyone gets access to financial information and services, no matter their economic status, gender, or location. The most basic indicator of financial inclusion is access to a bank account, but it doesn’t stop there.

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Customer safety and protection is an important part of financial inclusion, because after all, it’s money we’re dealing with here. Suficiencio said financial inclusion banks on “the idea that [individuals] are protected, safe, and can be part of the banking system.”

While it is aspirational, there are a lot of obstacles to overcome in order to make that the new normal for Filipinos everywhere. Apart from the lack of technological infrastructure, it’s a challenge to promote digital payments, electronic fund transfers, and more, if everything is siloed.

Gcash, a mobile wallet application, enables users to pay bills and transfer money. Clara Rosales
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Right now, the BSP wants to extend support and information to the agriculture sector, and micro, small, and medium enterprises in the country, which account for 60% of employment in the Philippines.

Ultimately, the goal is to remove the barriers holding the public back from walking up to banks or picking up their phones to establish a good relationship with their money and finances. If the individual knows how banking is supposed to work, they can be empowered to not only use services, but also demand for better services.

“We can’t really remove and decouple financial literacy from financial inclusion,” Suficencio said. 

Banking post-COVID

While there are limitations now, the BSP has set a goal of 70% financial inclusion by 2023. In order to achieve that, it means having more bank branches, cash agents, and an expanded network of touchpoints so consumers can open accounts easily. The BSP has started working on this by implementing InstaPay and PESOnet, and a virtual chatbot named BOB to address concerns.

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With more people included in the banking system, financial institutions like the BSP and your neighborhood bank will gain access to data. This means more data-informed decisions and structures that can empower customers to take hold of their finances.

As for the BSP, consumer protection is still paramount and they will be taking on a more active role in ensuring every individual benefits from the promise of digital innovation. “You don't just let the market, you know, drive how the system evolves. You also need to intervene and shape it in a deliberate manner,” Suficencio said.

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