March 26, 2023

FINANCIAL institutions are looking for chances to adopt solutions that will help them tweak their business models, increase operational effectiveness, and boost competitiveness. For 2023 and beyond, industry experts interviewed by The Manila Times expect most of those efforts to focus on continued digital transformation.

Kirill Kalashnikov, regional director for Asia Pacific at the Robocash Group CONTRIBUTED

Kirill Kalashnikov, regional director for Asia Pacific at the Robocash Group CONTRIBUTED

Kirill Kalashnikov, local director with regard to Asia Pacific cycles in the Robocash Group that operates in the Philippines through online lending platform Digido plus financial app UnaCash, said e-savings — accounts opened and operated online — would grow next year.

He pointed in order to a “positive difference between household income and expenses is growing in the country by our estimation, which allows people to save more” and added that they were seeing growing confidence inside opening bank accounts.

Kalashnikov also expects the introduction of more “super apps, ” which were noted simply by Accenture in its 2022 list of top banking trends.

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A super app is a mobile or web application that can provide multiple services, including payment and financial transaction processing. While undoubtedly complex, Accenture noted that only a handful of features were accounting for most customer usage: checking balances, paying bills, plus reviewing transactions.

“We see growth of licensed electronic banks [in the Philippines as] banking apps are growing in demand, non-banked super applications, ” Kalashnikov said, given the advantages of ease of access, minimal participation requirements, and access in order to other services.

The rise of digital banks will compel traditional financial institutions to fast-track digitalization, a reality acknowledged by chief economists at several banks.

“This (shifting to digital) would also fundamentally reduce the cost-to-income ratio associated with banks with less need for physical branches, ” Rizal Commercial Banking Corp. chief economist Michael Ricafort stated, adding that it would also increase convenience for customers as dealings can be done 24/7 and from anywhere around the world.

For Chinabank main economist Domini Velasquez, “[digitalization] will lead to a cutback on face-to-face transactions, inch while Union Bank of the Philippines key economist Ruben Carlo Asuncion said digitalizing would be the “biggest trend plus game-changing factor” for the industry.

“The use of technology to make banking a lot more convenient and safer will be critical regarding all of the bank industry, inches Asuncion added.

The Bangko Sentral ng Pilipinas, meanwhile, has been urging banking institutions in order to embrace green banking principles and Velasquez said he expected an increase in sustainable financing activities such as green bond and social bond offerings.

Digitalization will also help accelerate financial inclusion, which is also being pushed by the BSP given that many Filipinos, particularly farmers, remain unbanked.

“This can end up being a good possibility intended for non-banked fintech (financial technology) lenders like Digido with their comprehensible solutions without severe requirements to clients, ” Kalashnikov mentioned.

The shift to electronic, however, comes with increased security risks. With cyberattacks becoming more frequent plus sophisticated, Deloitte Consulting partner Timo Span said that “this requires banks in order to beef up their own security measures. ”

Customer trust, this individual added, will be a very valuable asset that can “only be effectively safeguarded along with a zero-trust security approach. ” This means the verification of every aspect of transactions, from the identity and location from the user, the devices used to the particular network itself, among others.

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