Switching from traditional to online banking? 7 things to know first
For decades, many Filipinos have relied on walking into a traditional bank’s branch, lining up for transactions, and filling out forms. However, in recent years, online banks have become more popular, especially as more people now prefer doing everything on their phones. If you’re thinking of moving from a traditional bank to a fully digital one, it helps to understand what makes them different and what you should check before making the switch.
So, before you open a bank account with an online bank, here are seven important things every beginner should know.
1. Check if the bank is regulated and protected
One of the most important things to look for in any online bank is whether it’s regulated by the Bangko Sentral ng Pilipinas (BSP). The BSP ensures that financial institutions follow strict rules to protect depositors. Along with this, deposits should be insured by the Philippine Deposit Insurance Corporation (PDIC). This means if something goes wrong with the bank, your deposits are insured up to ₱1,000,000 per depositor per bank. The Philippines’ leading digital bank, Maya, is one of the few digital banks legally recognized and licensed by the BSP and insured by the PDIC.
2. Compare interest rates carefully
A major reason people move to online banks is the higher interest rates. Traditional savings accounts often earn less than one percent, while online banks typically offer around 3.5% to 4.5% annually. Maya, in particular, has a base rate of 3.5% p.a. that can be boosted up to 15% p.a. under certain conditions. Do make sure to read the fine print carefully. Some interest boosts may apply only to new deposits, specific amounts, or a limited period.
3. Review the fees you might pay
You will often see “no maintaining balance” or “no monthly fees” as selling points of digital banks. However, this does not mean all fees disappear. For instance, some banks may charge an inactivity fee if you do not use your account for a certain number of months. Others may charge for international withdrawals or transfers.
Therefore, it helps to list the services you often use, such as sending money to family, withdrawing cash, or paying bills. After that, check if the digital bank charges fees for those. By doing so, you avoid unpleasant surprises later.
4. Verify how you can cash in and cash out
Cash remains important in the Philippines. This is why it’s necessary to check how easy it is to put money into your online account and how convenient it is to withdraw. For example, some allow free transfers from your traditional bank through apps like InstaPay or PESONet. On the other hand, cash withdrawals usually require an ATM, which not all online banks provide, so make sure that your chosen digital bank has ATM access. For instance, if you get the Maya Prepaid Card, you can withdraw from any Bancnet ATM here or abroad. Many digital banks also partner with convenience stores for cash-in services.
Consequently, if you need regular access to cash, it’s better to choose a bank that supports free or low-cost withdrawals through a wide network.
5. Check the quality of customer service
If you have a concern with your account in a traditional bank, you can simply walk into a branch and talk to a teller. Online banks don’t have that option, so customer service becomes even more important. Imagine your app suddenly freezes during a transfer, or you can’t access your account after a phone update. In these cases, having quick and reliable support could save you from a lot of stress.
To prepare for this, check reviews online, especially on social media and community forums. Pay attention to how people describe their experience with customer service. Do they have a hotline that works 24/7? Can you chat with a real person instead of just a bot? These are just a few critical questions you need to address.
6. Choose services that match your lifestyle
Not all digital banks are built the same. Some focus only on savings accounts, while others offer a wider range of products like credit cards, loans, or even investment options. When deciding where to place your money, it helps to think about how you usually manage your finances and what services could make your daily life easier.
For instance, if you often shop online, a digital bank that offers a virtual or physical card could be more practical. Or you might want a digital bank that offers investment options and time deposits so you can save and grow your money without switching between multiple platforms. If you prefer to have ready access to a wide range of products, Maya is a good choice. Aside from savings accounts, you can also open high-interest time deposits, invest, and even borrow money, all through the app.
7. Try the app before committing
Finally, remember that the app itself is where everything happens. Unlike traditional banking, where you rely on tellers and counters, in digital banking, the app is your branch, your passbook, and your ATM card all in one. That is why it’s wise to test the app carefully before committing.
For instance, check if it loads quickly and works smoothly on your phone. Does it allow you to pay bills, send money, or request a statement without hassle? Can you log in securely with biometrics like fingerprints or face recognition? If the app constantly crashes or feels confusing, you will likely end up frustrated, no matter how good the bank’s services look.
Make the transition to online banking seamlessly
Switching to online banking doesn’t mean you have to abandon traditional banks completely. In fact, many Filipinos now use a mix of both. For example, you can keep your payroll account in a traditional bank while using an online bank to grow your savings faster. The key is to know your needs and find online banking solutions that feel like a natural extension of your lifestyle rather than just another account to manage.
As with any financial decision, a little research goes a long way. So, when you finally decide to switch, you maximize your new account’s offers and services for your goals and habits.