[Finterest] Is a digital bank safe, and how can you best use it?

MANILA, Philippines – Digital banks often promise convenience and higher interest rates, but how do you know if it’s for you?

“Personally, I think the only difference is the word ‘digital.’ For all intents and purposes, in the eyes of the BSP, we are a bank,” GoTyme CEO Tinio told Rappler. The physical presence of bank branches can also provide a sense of security for depositors, which is partly why traditional banks often have a network of hundreds or thousands of branches all over the country. Digital banks instead rely on technology and their powerful apps to fill that need.

Since GoTyme is established as a joint venture with the Gokongwei Group, Clarke said that this should give customers the assurance that the mega-conglomerate will continue to fund the bank until it becomes profitable. “Just on that cost , we can then give you 4% interest on savings. We can make fees lower. But we can actually still be net profitable,” Clarke said.

GoTyme’s Go Save account originally boasted a 5% interest rate per annum, although the bank has brought this down to 4% starting March 2024. Still, these high rates are a big reason why digital banks are growing so quickly, as young professionals hunt for a better place to park their savings.

Source: Financial Digest (financialdigest.net)

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