Navigating Through Digital Wallets and Banks (Philippines)

These days of fintech, using digital banks is a no-brainer. Not to mention digital wallets. The last time I withdrew money from the ATM for my daily needs may be more than a year ago. I usually just pay via GCash and Credit Cards.

GCash (Digital Wallet)

The dominating digital wallet in the Philippines. Its adoption has been widespread that most merchants (i.e. small vendors) already accept payment through this. Even though Smart (the Philippine Telco) was the first one to introduce a PH digital wallet, they came in years early. Gcash flourished at the time the market was ready.

Since I'm using GCash, there is the GSave feature where it ties up with digital banks for the benefit of a savings account. Digital banks offer higher interest rate compared to the physical banks since it has lower operational expenses.

Where to put your Emergency Fund?

This should be liquid, meaning can be accessed anytime. There is an opportunity cost of not investing this, but at least place it somewhere accessible that can give higher yields. Digital banks offer that.

For more savvy investors, another option is to place your emergency fund into a money market fund which can also have liquidity (minimum 1 day hold).

Why Go Digital?

Financial inclusion is still a challenge in the Philippines. Prior to the rise of digital banks, it was estimated that around 70% of Filipinos were still unbanked. These means a lot does not have access to traditional banking services (e.g. no savings accounts, access to loans, investments, etc). With digital banks, these banking services can be made more accessible and may have contributed to lessening the unbanked to around 50-60%. Still a lot to cover though.

Security Concerns/ Customer Support - Humans still preferred, but no longer scalable

Part of financial education is to learn more on how to navigate these digital banking services. One possible cause of concern is on how to raise complaints/queries? People may be more comfortable dealing with fellow humans, especially if the technology is not easily understood.

Recently, I was trying to maximize the digital banks' rates so started transferring idle money from traditional savings accounts to Gcash (for Gsave - CIMB). It takes several steps especially since I don't want to pay service fees. Free transfer from BDO to CIMB

As online transactions can be complex, there is always a tendency to make mistakes. I missed one step in the process (validate through a link) and this lead to my fund to be floating (Debited in my account, but not yet transferred to my target account). Good thing I noticed it immediately and was able to follow up. I just had to email the Dragonpay support team and they were able to advise me on what to do. Had to submit some other requirements as proof but at least everything got sorted out in the end.

Adoption of Digital Banking Services is a Generational Matter

It would still take time before digital banking will be a normal thing to everyone. The Gen Z's may be the one who grew up in the world with Internet while the older generations are trying to keep up with the latest technologies. Technology always changes fast anyway. Let's all keep learning so as not to be left behind! :)