Following the anticipated conclusion of the monthlong Luzon lockdown, customer behavior toward banking may change as more could be expected opting to use digital channels after the community quarantine.
The country’s biggest island was placed under a lockdown mid-March as coronavirus disease 2019 (Covid-19) continued to infect more people, prompting local banks to operate in limited capacity and shortened hours.
To compensate, monetary authorities and local bank executives have been urging the customers to transact online via digital platforms at the comfort and safety of their homes.
“The potential that people would be opting lesser face-to-face contact transactions is very high in the eventual lifting of the enhanced community quarantine,” UnionBank Chief Economist Ruben Carlo O. Asuncion told the BusinessMirror.
This could lead to increase in preference over digital banking, Asuncion added.
UnionBank, for its part, recently introduced a new online platform it dubbed “Dashboard,” which allows user to transfer funds, pay bills and manage accounts and credit cards, among others.
RCBC Chief Economist Michael L. Ricafort said that digital banking has lessened the need for cash withdrawal, as this allows customer to accomplish transactions online.
“As more people are encouraged to stay and work at home as part of the stringent measures to prevent the coronavirus from spreading under the enhanced community quarantine of Luzon, they also need to purchase and stockpile food and other basic necessities using cash or through digital/electronic payment channels,” he explained.
Ricafort added that businesses also use digital platforms to pay off the salaries of their employees.
In a recent report, RCBC noted that the daily average of new signups in the first two weeks of the enhanced community quarantine rose by 117 percent from the two weeks prior.
Cash withdrawals
While banks offer online platforms, some customers would still prefer to hold on to cash and transact traditionally due to uncertainties amid the lockdown.
“During times of crisis or panic, economic agents would tend to demand cash given the uncertainty and anxiety,” ING Bank Manila economist Nicholas Mapa said. “Should the situation deteriorate rapidly, consumers would like to have cash on hand to afford buying basic goods and necessities or even just to have access to their wealth in case banks are forced to close down altogether,” Mapa added.”
Mapa is confident that the banking system has ample liquidity amid the surge in withdrawals. Monetary authorities and the Bankers Association of the Philippines offered the same assurance earlier.
“After the community quarantine is lifted, we may see an increase in deposits or a slowdown in withdrawals as people simply use the cash they had previously withdrew over the quarantine period,” he added.