Are Filipinos Ready For Digital Banking?

In 2022, $28.54 billion worth of real-time digital transactions will be conducted in the Philippines. According to estimates, the average transaction value of Filipino “neobank” users is expected to reach $6.28 million by the end of 2022.

Fintech innovations are revolutionizing commerce and retail in ways beyond imagination. Consumer Essentials advances the financial ecosystem by transforming the point-of-sale experience for buyers and sellers.

Cash is still the dominant currency, but that’s slowly changing

Even in 2022, cash is still the most important payment method in the Philippines. 93 percent of respondents said they had paid with cash in the past three months, and 60 percent of respondents said cash was their most used payment method. The Philippines is the country with the highest proportion of cash payments in Asia.

This is to be expected as Filipinos have historically shown a strong preference for cash over digital payments. In 2019, according to Bangko Sentral ng Pilipinas (BSP), cash still accounted for 95% of local transactions. The reason for this is the Filipino people’s lack of awareness of digital wallets and how they work, concerns about security risks and the slow internet speeds in the country.

But progress is also unstoppable in the Philippines and payment apps are now facilitating real-time payment processes. A new trend is emerging and embedded finance and POS systems as well as digital central bank currencies and cryptocurrency transaction services are simplifying digital payments. This means that it is also becoming easier and easier to transfer money from Germany to the Philippines.

2022 payment trends in the Philippines

The real-time payments segment is growing fastest in the Philippines, with a CAGR of nearly 400 percent. Despite apparent growth, a significant proportion of Filipinos remain unbanked.

Nonetheless, the Philippines has identified real-time digital payments as one of the most viable and inclusive alternatives for personal and commercial use cases. The Philippines has native payment methods like PayMaja or GCash and other cross-border payment methods that offer users low fees and rewards for using their native programs.

By 2025, the Philippine economy wants around 70 percent of the population to use digital payment methods.

While Filipinos have been slow to embrace new financial services, studies have found that since the global health crisis erupted, they have become increasingly open to digital payment methods; because with the entry of digital payment transactions into the lives of Filipinos, trust in digital payment platforms is also increasing.

Crypto as a wealth management platform is on the rise

56 percent of Filipinos surveyed invest through digital trading and wealth management platforms. Cryptocurrencies are gaining popularity among respondents, and 33 percent of Filipinos invest their funds in a cryptocurrency exchange.

This is just 1% of the ASEAN six countries, second only to Thailand at 39 percent. It is worth noting here that Filipinos have the highest level of confidence in cryptocurrencies compared to the overall ASEAN average.