Now, need is perhaps a strong word. I ought to change the title to “why you should have a digital bank account in the Philippines.” All the same, I’m a huge proponent of opening accounts with digital banks. But I also understand there’s a lot of fear around non-physical banks. Here are some insights to help you decide if it’s worth looking into or not.
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Are you scared of digital banks?
I honestly get it. The idea of losing all of your hard-earned money is terrifying. (A bit of a digression, but you should never invest in a product you don’t understand anyway.) So where do you currently have your savings? With one of the larger banks like BPI or Metrobank? Interestingly, that’s essentially no different from having it in a digital bank.
All PDIC member banks are insured up to Php500,000.
And, yes, digital banks are PDIC members. You could argue that BPI and Metrobank are larger banks and the likelihood of them closing is very small. But did you know that CIMB, the bank tied up to GSave (from GCash) accounts, is the 5th largest bank by total asset size in Southeast Asia? In comparison, BDO Unibank, the Philippines’ largest bank by total assets, was at number 15. Ranking 21st was Metrobank.*
Benefits of digital banks
Digital banks don’t have the costs associated with brick-and-mortar banks. These cost-savings are passed on to consumers in the form of higher interest rates. The savings are apparently huge as the differences in interest rates are significant. You can expect to earn anywhere from 2.5% to 4%.
A Php500,000 deposit can potentially earn you Php20,000 in a year, less withholding taxes.
HUGE! That’s Php20,000 foregone cash just by holding on to traditional brick-and-mortar banks. Because interest received is guaranteed, the high-interest deposits are arguably better than most money market instruments. I personally retain my checking accounts and accounts linked to stock brokerages but, other than that, there’s not much reason to stick with traditional banks.
Important players as of January 2021
The digital banks in the Philippines I’ve had personal experiences with are: CIMB (linked GCash/GSave), Komo (by EastWest Bank), and DiskarTech (by RCBC). Another significant player in this space is ING Bank. It’s easy to open multiple accounts because of their zero maintaining balance. In fact, it might even be prudent as a way to diversify (much like reducing risk in the stock market through diversification).
I avoid listing current interest rates of digital banks because they constantly offer promo rates anyway. What’s highest now may not be the best yielding deposit product in a few months, which makes choosing among the digital banks irrelevant. You can be sure though that their rates will be higher than traditional banks’ because they have the incentive to do so.
CIMB
I’ve already mentioned CIMB. It is Southeast Asia’s 5th largest bank with headquarters in Malaysia. I’ve not tried opening directly from the CIMB app and my preferred method is through GCash, Globe Telecom’s e-wallet. In the GCash app, select GSave. Don’t forget to link your GSave account with CIMB. Linking will remove your GSave/CIMB account restrictions such as a maximum deposit of Php100,000 and an expiration period of 12 months. Withdrawing cash from your GCash account, unfortunately, has its fees and I have not availed of CIMB’s free VISA card.
Komo
Komo is an EastWest Rural Bank product. What’s unique about them is you get a free VISA debit card just by opening an account. This means you can withdraw your cash through an ATM. I honestly can’t think of a con here. Funny enough, this is my least used digital bank.
DiskarTech
DiskarTech is a Taglish digital bank offered by RCBC. To me, the highlight is their cardless ATM withdrawal feature! But for full transparency, 2 of the 3 ATMs I tested had errors (no cash available and a random error). It’s a relatively new offering though and I’m confident they’ll patch this up. The maximum deposit is sadly just Php50,000.
How to proceed
If you’re overly risk-averse and still apprehensive about it, a strategy you could use is to open with several digital banks. This is particularly easy to do because of the zero maintaining balance requirement of these banks. All you need is a valid ID and you’re good to go. In fact, it’s amazing how fast creating a DiskarTech and a Komo account are. It takes 5 minutes and I’m not exaggerating. As long as you have your valid ID with you and an internet connection, it literally takes 5 minutes.
You may use the following links below. Some are affiliate links which you may or may not use. I appreciate if you do as it helps support the website. I’ve also specified the bonuses they include.**
- GCash / GSave / CIMB: https://gcsh.app/r/oJx5Gnp –Php70.00 worth of freebies
- PayMaya Code: https://www.paymaya.com/ (code PK3754WZE8L2) –additional Php100.00 to you upon upgrading and adding money
- Komo: https://www.komo.ph/
- DiskarTech: https://diskartech.ph/ (code ABEM9327)
PayMaya is Smart’s e-wallet. Unlike GCash, PayMaya has yet to link with a bank. Since it’s in their best interest to do so, I’ll update this space when new information is available.
You NEED a digital bank
With its high interest rates, zero maintaining balances, ease of application, and security as PDIC members, you need to open a digital bank just because of the foregone interest that traditional banks are costing you.
A large number of the population remain apprehensive because it’s new technology. Just as the public was scared of the Internet or even traditional banks themselves (remember people used to keep cash under their mattresses), this new technology will eventually gain ground. It’s hard to imagine life without the Internet. It’ll be hard to imagine life without digital banks, too, now that they’re here.
*Data according to Forbes 2019
**All bonuses are based on January 2021 terms and conditions. You may read my affiliate disclosure on my Terms & Conditions page, #6 Links.
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