How can financial institutions level up their services in the age of digital transactions?
More than two years into the pandemic, digital transactions are now considered the new norm to ensure safety. As a result, it prompted financial institutions to fast-track their digital transformation.
In a recent study, IDC and Backbase revealed that 60% of more than 1,000 surveyed individuals in the Asia-Pacific are likely to switch to a more digital bank. In fact, in the Philippines, it’s also the same. According to a 2021 survey by Fico, 61% of 1,000 Filipino adults now prefer digital platforms compared to the last year.
Support and improving the digital shift in the country paved the way for the Bangko Sentral ng Pilipinas (BSP) to establish a new category for banks, digital banking. Through this, BSP aims to convert 50% of transactions to digital services and achieve its 70% goal of Filipinos with bank accounts in 2023.
Recently, the BSP has given licenses to six banks, whether new or existing financial institutions in PH, to shift towards digital banking. And as several banks emerge due to digitalization, IDC and Backbase remarked in their same report that the Asia-Pacific will have at least 100 new financial institutions by 2025.
With this reality, the study also indicated that 38% of the conventional or brick-and-mortar banks’ revenues will be at risk by 2025 across the region. It puts traditional banks in a difficult position as they find innovative, creative, and fresh offerings so they can compete in the current situation to retain and attract customers.
Elevating banks’ services for customers
The good news is, that there is a concept that is now fast becoming a global trend that financial institutions can offer as a part of their service offerings. It is called Earned Wage Access (EWA), a solution that started in the United States but is now seen around the world.
EWA enables employees to access their salary before payday and release their already earned wage with just a click of a button. It can be integrated and offered by banks to their corporate accounts so employers can incorporate it as an employment benefit for their employees.
It works in simple ways. Through the EWA app, employees can easily see their current earned salaries. Then, if they want to have an advance on their wages, they can request it via the platform. The requested amount will be transferred to the employee’s bank account as soon as it’s approved.
Offered by PayKey, a fintech company based in Israel, this white-labeled solution will now be available in the Philippines this year. As it is not a loan, EWA will have no interest rate because employees will access and withdraw their own money. However, it has a fixed transaction fee at every withdrawal.
“Integrating EWA is a great way for banks to elevate their service offerings. This solution is not just innovative, but it will also help address the financial needs of employees in the Philippines. At PayKey, we hope we can aid banks to attract and retain customers as competition in the market gets tougher with the emergence of new financial institutions,” said Roy Gabriel, chief innovation officer, and general manager of PayKey.
To learn more about PayKey, visit its website at https://paykey.com/.