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Asiamoney, September 21 2020

Many Filipinos switched to digital channels during lockdown. Bankers think customers are unlikely to return to branches now that they have had a taste of what it is like to go cashless. That would be good for banks – and for financial inclusion.

Filipinos are breaking the habits of a lifetime when it comes to banking, thanks to coronavirus.

“In the Philippines, a lot of the customer interactions historically were done physically, typically in branches,” says Eduardo ‘Edu’ Olbes, chief financial officer at Security Bank in Manila.

But that stopped very quickly in March, following the first cases of coronavirus in the Philippines and the imposition of a restrictive lockdown. There has been a surge in take-up of digital banking services that should improve financial inclusion and equality in the Philippines in the long run.

The picture varied around the country, but in certain parts of the capital region, three quarters of bank branches were closed, while restrictions on transport, strict social distancing requirements and a night-time curfew meant that people were barely allowed out to visit them anyway.

“While the regulator called out banks as being critical necessities, the reality is the physical infrastructure of the banks was hamstrung,” Olbes says. “Clients really had no choice, and many opted to swing to digital channels.”

To get an idea of how consumer habits changed with the lockdown, consider the two main transaction systems used in the Philippines for electronic fund transfers – Instapay and PesoNet. Instapay is used for digital payments with a relatively small value, settled in real time, while PesoNet is for larger transactions, not in real time but usually completed within a day.

Data provided by the Philippines government shows that use of PesoNet surged 325% in terms of transaction volume between April and May, while InstaPay jumped 57%. And bankers expect the numbers to stick.

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Chris Wright
Chris Wright
Chris is a journalist specialising in business and financial journalism across Asia, Australia and the Middle East. He is Asia editor for Euromoney magazine and has written for publications including the Financial Times, Institutional Investor, Forbes, Asiamoney, the Australian Financial Review, Discovery Channel Magazine, Qantas: The Australian Way and BRW. He is the author of No More Worlds to Conquer, published by HarperCollins.

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