Philippines lags behind in digital banking in Asia - study


Posted at Mar 09 2015 04:39 PM | Updated as of Mar 11 2015 05:07 PM

MANILA – While most consumers in Asia are moving into digital banking, the Philippines is still lagging behind in digital banking penetration among Asian countries, a study by consulting firm McKinsey showed.

The study said that digital banking penetration in the Philippines is only 13 percent as of 2014, ranking last among the 13 developing countries surveyed.

South Korea and Australia had the highest penetration at 96 percent, followed by Singapore (94 percent), Hong Kong (93 percent), and Taiwan (92 percent).

Other countries that were included in the survey were Japan (83 percent), China (57 percent), Vietnam (44 percent), Malaysia (41 percent), Indonesia (36 percent), Thailand (19 percent), and India (18 percent).

McKinsey defined digital penetration as the number of users of internet or smartphone banking divided by total banking consumers in each country. Only urban consumers were included in the study.

McKinsey said it is expecting the shift towards internet and smartphone banking to continue, noting a spike in digital consumers since 2011.

It said that between 2011 and 2014, the number of respondents who use PCs and smartphones for internet banking has grown 1.6 times in developed Asia and 3.3 times in emerging Asia.

“Since 2011, digital banking has soared across Asia. A McKinsey study shows consumers of financial services are turning to computers, smartphones, and tablets more often to do business with their banks, while visiting branches and calling service hotlines less frequently. Despite some structural obstacles, the shift is likely to continue, and incumbents and entrants alike should prepare for the consequences,” the consulting firm said.

McKinsey said “digital consumers” now represent more than 700 million customers across Asia, a significant portion of which are in fast-growing markets like China and India.

The study showed that in developed Asia, 92 percent of respondents in 2014 said they had used internet banking, compared with 58 percent in 2011.

It also revealed that 61 percent had accessed banking services using smartphones, more than three times the penetration seen in 2011.

Internet-banking penetration in emerging markets, meanwhile, rose to 28 percent in 2014 from 10 percent in 2011. Smartphone access also grew to 26 percent last year from 5 percent in 2011.

“In developed Asia, customers connect with their banks over the Internet or via smartphones more often each month than over traditional channels. In emerging Asia, these traditional channels, especially ATMs, still dominate, but customers are using Internet and smartphone banking almost five times more often than in 2011. Across Asia, consumers made fewer branch visits and calls in 2014 than in 2011,” the report said.

The survey results are based on a combination of online surveys and one-on-one 60-minute interviews of financial service consumers across Asia.

McKinsey surveyed about 16,000 consumers covering mass, mass affluent and affluent consumers across 13 markets in Asia including Japan, India and China as well as those in Southeast Asia such as Singapore, Malaysia, Indonesia, Philippines.