Livelihood Series: Empower Your Small Business with Digital Banks and E-Wallets

Heads up: This is a comprehensive post, but don’t worry if you can’t read it all at once. We’ve highlighted the key points that we believe will be most beneficial for our readers. Feel free to focus on those! Also, please read the disclaimer before taking critical actions based on the information we provide.

Key Takeaways 

Digital banks and e-wallets empower Filipino MSMEs by:

• Simplifying financial management: Streamlining transactions, automating payments, and offering budgeting tools.

• Improving cash flow: Facilitating faster transfers, reducing delays, and offering access to loans.

• Boosting access to financial products: Providing micro-investments, competitive interest rates, and flexible solutions.

• Enhancing financial literacy: Offering resources and tools to manage finances effectively.

How Digital Banks Can Empower Filipino Micro, Small, and Medium Enterprises (MSMEs)

The world is rapidly shifting to a digital economy, and competitive businesses need to adapt to keep up. 

The 2020 Asia Pacific SMB Digital Maturity study in the Philippines showed that digitally matured Small and Medium Businesses (SMBs) have higher benefits in revenue and increased productivity, contributing to their growth and economic recovery. 

According to the U.S. Census Bureau, e-commerce sales increased by $244.2 billion or 43% in 2020, the first year of the pandemic. 

One of the ways that MSMEs can leverage the power of digitalization is by using digital banks and e-wallets.

What is a Digital Bank?

A digital bank is a bank that operates entirely online, without any physical branches. It offers convenient and accessible banking services through mobile apps or web platforms. Some of the key features of digital banks are:

• Faster transactions

You can send and receive money, pay bills, and make purchases in seconds, without waiting in line or filling out forms.

• Lower fees

You can save on banking fees, as digital banks often charge less or nothing for account maintenance, fund transfers, ATM withdrawals, and other services. 

 

• Personalized financial tools

You can access innovative features like budgeting tools, savings goals, financial insights, and more, tailored to your needs and preferences. 

 

• Regulated by the BSP

You can trust that your money is safe and secure, as digital banks are regulated by the Bangko Sentral ng Pilipinas (BSP) and follow the same rules and standards as traditional banks.

How Can Digital Banks Help MSMEs?

Digital banks can offer many benefits for MSMEs in the Philippines, such as:

• Simplify financial management

You can open an account in minutes, without any paperwork or minimum deposit. You can also monitor your account balance, transactions, and statements anytime, anywhere, on your phone or computer.

• Improve cash flow

You can transfer funds, pay suppliers, and collect payments online, without any delays or hassles. You can also automate your payroll, taxes, and other recurring payments, and avoid penalties and late fees. 

 

• Boost access to financial products

You can apply for loans, micro-investments, and other financial services that are usually hard to get for MSMEs. You can also enjoy competitive interest rates, flexible repayment terms, and minimal requirements. 

 

• Enhance financial literacy

You can learn more about financial topics and best practices through educational resources and financial planning tools provided by some digital banks. You can also get personalized advice and support from financial experts.

Best Digital Banks for Filipino MSMEs

Here is a table comparing some of the top digital banks in the Philippines that cater to MSMEs: 

Other Digital Banks and E-Wallets

What is an e-wallet?

An e-wallet, also known as a digital wallet, is a digital tool that securely stores a person’s payment information and facilitates online transactions, cashless in-store payments, and peer-to-peer transfers E-wallets, can store  credit cards, debit cards, boarding passes, identification cards, membership cards, and more in a digitalized form all in one place. They are primarily used to store money and payment information, making transactions quick and convenient.

Understanding the Distinction Between E-Wallets and Digital Banks

The key differences between e-wallets and digital banks are:

1. Functionality

E-wallets are primarily used for making payments and transferring money, while digital banks offer a wider range of financial services, including savings accounts, loans, and investment products.

 

2. Regulation

Digital banks are regulated as banks and are required to meet the same regulatory standards as traditional banks. In contrast, e-wallets are not banks and are subject to different regulations.

 

3. Account Requirements

Digital banks often require more information to open an account compared to e-wallets.

 

4. Interest

Digital banks can offer interest on deposits, while e-wallets typically do not.

Both e-wallets and digital banks offer convenience and ease of use, but the choice between the two depends on your specific needs and preferences. For simple transactions and payments, an e-wallet might be sufficient. However, for more complex financial needs, a digital bank might be more suitable.

Unlocking Growth and Efficiency with a Tap

Based on the data from the Philippine Statistics Authority and other sources, the median age of the Philippine population in 2020 was 25.3 years.

According to a new study by consumer credit service Digido, Filipinos spent 4.4 million hours using e-wallet apps in 2021. Over 58 million Filipinos were active users of the e-wallet apps examined for the study, and it’s estimated that the number of users could reach 81 million by 2025.

Other Digital Banks: A Deep Dive into Their Features and Benefits

1. UnionDigital Bank (UDB) 

UnionDigital Bank is a digital banking platform that requires users to download the app and register. Currently, users have to join the “Whitelist” of the bank to receive their invite code. The bank provides a range of retail banking solutions, making it a versatile choice for customers. However, one potential drawback is that users have to wait for their invite code to register their account, which could delay the onboarding process.

2. GoTyme (GTYME) 

GoTyme is another digital bank that offers a unique benefit: the ability to earn rewards points for free flights. This could be particularly appealing to customers who travel frequently. However, the specific requirements for opening an account with GoTyme are not specified, and it’s recommended to check their official website or contact their customer service for detailed information.

3. Tonik Digital Bank Inc. (TONDB) 

Tonik Digital Bank Inc. stands out for its attractive interest group savings feature, offering a 4.5% p.a. interest rate. This could be a great option for customers looking to grow their savings. However, the specific requirements for opening an account with Tonik are not specified.

4. Maya Bank Inc. 

Maya Bank Inc. is a digital bank that offers a range of services. However, the specific requirements for opening an account, as well as the specific pros and cons of banking with Maya, are not specified. It’s recommended to check their official website or contact their customer service for more information.

5. Overseas Filipino Bank Inc. (OFBank) 

Overseas Filipino Bank Inc. is a digital bank that caters to the needs of overseas Filipinos. However, the specific requirements for opening an account, as well as the specific pros and cons of banking with OFBank, are not specified.

6. UNObank Inc. (UBI) 

UNObank Inc. is a digital bank that offers time deposits, a type of investment product that could be a good option for customers looking to earn interest on their savings over a fixed period. However, the specific requirements for opening an account with UNObank are not specified.

Each of these digital banks offers unique features and benefits, and the best choice depends on your specific needs and circumstances. It’s always a good idea to do your research and consider all your options before deciding on a digital bank.

E-Wallets: A Key to Unlocking Growth and Efficiency for MSMEs

In the current digital age, embracing innovative tools is not just an option but a necessity for Micro, Small, and Medium Enterprises (MSMEs) to thrive. Among these tools, digital wallets stand out as they offer a convenient and secure way to manage finances, thereby streamlining transactions and opening doors to new opportunities. Let’s delve into some of the top digital wallets in the Philippines that are particularly beneficial for MSMEs:

1. GCash 

With just a valid ID for verification, you can unlock GCash Pro, a comprehensive business portal that allows you to manage expenses, disbursements, and logistics with ease. From paying suppliers and staff instantly to accessing business loans and insurance, and even availing government services, GCash equips your MSME to operate with efficiency and agility.

2. ShopeePay 

Seamlessly integrated with your Shopee account, ShopeePay offers a 60% cashback program on transactions, significantly boosting your profitability. It allows you to offer your customers convenient payment options and leverage Shopee’s extensive user base for targeted promotions, thereby driving sales and enhancing brand visibility.

3. Maya

 

By simply signing up, you can unlock the potential of Maya. It allows you to borrow up to PHP 2 million via the Maya Flexi Loan with minimal fees and no collateral, providing the financial fuel for your growth. Maya is constantly expanding its business-specific offerings, ensuring your financial toolbox evolves in tandem with your MSME.

4. Lazada Wallet

By connecting your Lazada account and preferred payment method, you gain access to a seamless payment gateway for Lazada buyers, thereby expanding your customer reach. You can tap into the vast network of Grab users and drivers for potential delivery partnerships and leverage Lazada’s rewards program to attract and retain customers.

5. Seabank

By downloading the Seabank app and signing up, you can enjoy high-interest savings on your business reserves and send/receive payments instantly. Seabank is constantly evolving, so stay tuned for exciting announcements of upcoming MSME-focused features and services.

6. GrabPay

By undergoing KYC verification, you can benefit from GrabPay’s robust security measures, ensuring transparent and safe transactions. It allows you to earn rewards and cashback on your everyday business expenses, and explore potential future partnerships with Grab’s extensive delivery and transportation network.

Digital wallets offer a plethora of benefits for MSMEs, from simplifying transactions to providing access to a wide range of financial services. By choosing the right digital wallet, MSMEs can unlock significant growth and efficiency.

Please note that while digital banks and e-wallets offer many advantages, it’s important to consider the potential risks and ensure that you’re using these platforms securely. Always keep your devices and accounts secure, and be aware of the terms and conditions of the services you use. Beware of spammers and scammers too. Never click unsecured or untrusted links sent on your emails or through SMS.

Considerations

Before choosing a digital bank, you should consider some factors, such as:

• Security

You should check the security features and policies of the digital bank, such as encryption, authentication, and fraud prevention. You should also protect your account information and devices from hackers and scammers.

 

• Customer support

You should look for a digital bank that offers reliable and responsive customer service, through phone, email, chat, or social media. You should also check the reviews and ratings of other customers to get an idea of their experience and satisfaction.

 

• Integration

You should find a digital bank that integrates well with your existing business platforms, such as accounting software, e-commerce platforms, and payment gateways. You should also check the compatibility and functionality of the digital bank’s app or website with your devices and internet connection.

Choosing a digital bank can be a smart move for your MSME, as it can help you save time, money, and effort, and improve your financial performance and literacy. However, you should do your research and compare your options before selecting a digital bank that suits your needs and preferences.