CIMB rolls out digital banking services in Philippine expansion

On Jan 30, 2019

MANILA — Malaysian lender CIMB Group Holdings launched on Tuesday its first digital banking app in the Philippines, where over 90% of consumers still prefer to pay in cash.

CIMB, one of Southeast Asia’s largest banks, wants to distinguish itself from well-established local players, which already have nationwide networks of physical branches.

Vijay Manoharan, chief executive of CIMB Philippines, said the bank aims to cater to Filipinos’ growing demand for digital banking.

“We want to meet the unmet needs of the digitally savvy Filipino consumer,” Manoharan said. CIMB Philippines aims to lure 100,000 retail clients in 2019 and launch new products in the next six months.

Dutch lender ING Bank has already rolled out a mobile app for its retail banking operations in the country.

The expansion of the two banks comes as Bangko Sentral ng Pilipinas, the country’s central bank, aims to increase electronic payments to 20% of total transactions by 2020.

CIMB also faces competition from China’s Tencent Holdings and Alibaba Group Holding affiliate Ant Financial Services, both of which have acquired stakes in local companies to take advantage of the country’s mobile potential.

In 2014, the Philippines allowed foreign banks to do business freely, ending two decades of permitting just 10 foreign lenders to operate. CIMB obtained its license from the central bank in 2017.

CIMB faces challenges in its new operations as Filipinos — like many other Southeast Asians — love cash and distrust e-payments. Cashless transactions grew just 0.8% to 481 billion pesos ($9.04 billion) in 2017, making up 1% of all transactions, according to the central bank.

InstaPay, which was launched in April 2018, reached 880,374 transactions at the end of last year while PesoNet increased by 129%, or 425,608 transactions, from November 2017 to December 2018.

A central bank survey in 2017 found that 46% of online-payment account holders were hesitant to use e-payments, and 58% of them were fearful of hacks and data theft. The remainder said they were not aware of payment platforms, or were reluctant to use them because of slow internet speeds, a common problem in the Philippines.