Filipinos are among the world’s most enthusiastic adopters of digital funds, with digital banks now an integral part of daily life. More than ever, Filipinos are managing growing proportions of their money entirely in the digital realm thanks to the unmatched convenience offered by these modern financial institutions. These new banks also often provide higher interest rates on savings compared to their traditional competitors, further accelerating the Philippines’ financial inclusion.
The rapid growth of the digital finance market has also encouraged the proliferation of numerous financial technology (fintech) businesses, including many within consumer finance. While many of these fintechs are indeed promising, not all are necessarily deserving of your trust. A few arguably exploit the increasing demand with fake endorsements, unrealistic offers, and poor consumer protection measures.
The worst of these bad actors promise easy, unregulated loans and exaggerated savings yields, often inserting questionable fees somewhere along the way. Others are undoubtedly legitimate but simply have not built the systems or the stability needed to effectively protect their customers.
As digital finance becomes even more intertwined with our daily lives, we must all learn to distinguish trustworthy digital banks from those that might jeopardize our finances. Keep these trust signals in mind before you open an account at a digital bank:
1. BSP Supervision and Licensing
By far, the most reliable trust signal for digital banks is if they are being regulated by the Bangko Sentral ng Pilipinas (BSP). Any BSP-supervised digital bank is going to be subject to strict standards and protections that safeguard both your money and personal information. If a financial institution operates without a license, they may very well be engaged in unauthorized activities that not only endanger your funds but also expose you to legal risk. Always check the BSP’s official website for a list of the digital banks they are supervising to confirm the legitimacy of any bank you’re considering.
2. PDIC Insurance Coverage
In the Philippines, legitimate banks should be covered by the Philippine Deposit Insurance Corporation (PDIC), which protects deposits of up to ₱500,000 per depositor in case the bank goes out of business. Less trustworthy operations will not offer PDIC protections.
3. Transparent Terms and Conditions
Trustworthy financial institutions will clearly outline their terms and conditions, including fees, interest rates, and account requirements. If it buries important details behind multiple web pages or uses vague wording, you may want to stay away.
4. Credible Data Privacy and Security Features
All financial institutions must prioritize data protection, given that they handle money and sensitive customer information. At the very least, they must employ encryption technologies and two-factor authentication (2FA) on their apps and web platforms. A fintech or bank that does not employ these basic protections can be deeply vulnerable and should not be your first choice for managing your money.
A trustworthy digital bank should also have the National Privacy Commission (NPC) Seal of Registration. This is required for all entities that handle and process personal data. With this seal, consumers can rest assured that the establishment complies with NPC regulations.
5. Positive Reputation
Once you’ve narrowed down your choices, read reviews on multiple trusted platforms and ask for recommendations from people you trust. Everyone will have different opinions but a consensus across multiple sources can give you a clue as to whether you should be dealing with certain banks.
6. Seamless User Experiences On Apps and Websites
Intuitive banking platforms take a lot of time, money, and consumer focus to develop. If a bank’s app and website are easy to navigate and efficient, it’s probably a sign that they have made serious investments in the customer experience. Subpar interfaces, on the other hand, often indicate a lack of respect for customer perspectives. Even worse, they may also indicate a lack of care in other key areas like data privacy.
7. Partnerships with Reputable Public and Private Organizations
Trustworthy institutions will tend to collaborate with each other. A partnership with a major government agency or globally recognized players like Visa or Mastercard will almost certainly indicate that a digital bank has high operational standards.
8. Accessible and Responsive Customer Support
Another good sign that a digital bank can be trusted is prompt customer support over multiple channels. If you haven’t committed yet, test your prospective bank’s responsiveness on chat or phone hotlines by asking a few questions first. Trustworthy banks will be ready to assist you in minutes and not lead you around in circles before they give you an answer.
9. Realistic Marketing Pitches
Things that are too good to be true often are. Trustworthy digital banks may offer rates or projections that are competitive but are realistic when you consider the wider market contexts. Only unethical or desperate banks and fintechs will claim extraordinarily high savings yields or “instant” loans without any background checks.
10. Regular, Clear Communication and Updates
Regardless of whether they are traditional or digital, great banks will keep their customers well-informed about updates and changes in policies. They will take necessary steps to make sure that you know these developments are about to happen, even using multiple channels where you have consented to receive updates so that you know what to expect. Less trustworthy or more amateur operations might not communicate often or clearly enough, resulting in less transparency and more risks to your funds.
You Deserve a Financial Partner You Can Depend On
The above-mentioned indicators may tell you whether a fintech or digital bank presents an acceptable risk. At the end of the day, however, a bank can tick all the boxes but still not be quite right for your needs. For that reason, you’ll want to keep your options open and keep looking out for credible bank reviews from individuals similar to yourself. Hopefully, the next bank you choose prioritizes your trust and commits to being a real partner in your financial journey.