Filipinos are fast adapting to digital banking as shown by the recent survey by analytics software firm FICO wherein 56% of the respondents said they now prefer to do their transactions online.
The COVID-19 pandemic restrictions “forced” people to adapt to online or digital transactions. Add to that is the high level of smartphone penetration that enabled 29% of respondents to use mobile banking; 12% used internet banking; and 4% preferred telebanking.
“The risk of infection and social distancing requirements made branch visits less appealing last year, accelerating a shift to digital banking channels globally,” said Aashish Sharma, risk lifecycle and decision management lead for FICO, Asia Pacific. “Being able to deliver and manage numerous channels in line with customer preference and deliver a seamless and engaging experience is a challenge that is here to stay. Investment in customer management and communication tools that span these channels and product silos, and can deliver personalization and improved decision making, is key to making digital banking a success.”
FICO’s “Advancing New Experiences in Digital Banking” survey was conducted in December 2020 using an online, quantitative poll of 5,000 consumers across 10 countries, carried out on behalf of FICO by an independent research company. The countries surveyed were Australia, Hong Kong, Indonesia, Malaysia, New Zealand, Philippines, Singapore, Taiwan, Thailand, and Vietnam.
Customer attitudes to new technology from banks such as debt collection automation can yield some interesting preferences and behaviors.
“It is worth noting that during periods of hardship, some customers prefer to deal with the issue using intelligent, automated online services, such as our FICO Customer Communication Services (CCS) so as to avoid the embarrassment of talking to an agent about outstanding loans. If customers prefer digital channels during times of hardship, their most difficult time, it seems to me we can expect branch banking to continue its decline,” said Sharma.
Banks vs fintech
According to FICO, traditional or well-established banks still have a data and relationship advantage when compared to fintech challengers. The survey revealed that across the Asia Pacific (APAC), 1 in 3 consumers preferred to have all their banking needs serviced by one bank. In the Philippines, this was higher at 40%, with a further 34% said that they “somewhat agreed” they would like to deal with just one primary bank.
“Managing multiple bank accounts or financial products with different lenders can often be a complex, time-consuming and costly process for the average banking customer,” said Sharma. “Digital banking users today are looking for greater control and visibility of their financial position.”
When asked about their willingness to try a fintech or challenger bank, 24% of Filipinos said that they were inclined to consider a competitor with a further 43% relatively open to the idea.
“To consolidate and strengthen main bank engagement, lenders need to offer digital banking features that compete with the challengers to ensure the stickiness and viability of long-term customer relationships,” added Sharma.
When asked about the reasons they would make the switch to a competitor, 38% of Filipino respondents said their No. 1 reason would be to secure improved personalization and controls in their digital banking service. The poll defined this as the ability to view transaction history, update personal details, reset passwords and other such functions. Interestingly, personalization and control was also the top reason for switching across the APAC (31%).
Other top switching drivers across APAC were the ability to control a payment card (set transaction limits, lock and unlock), the ability to set up recurring payments; and improved security features such as biometrics and two-factor authentication.