Digital Banks VS Traditional Banks Philippines. Which is better? - The Thrifty Pinay

Digital Banks VS Traditional Banks Philippines. Which is better?

As the competition between digital banks and traditional banks intensifies, financially-savvy people and personal finance junkies, at some point, will have to deal with decisions related to where they should put their hard-earned money.

With almost everything being internet-based and cashless, it’s no surprise why virtual banks are on the rise. And so, if you’re struggling to decide on which type of bank is best to achieve the maximum benefits of your hard-earned money, then I hope this guide, ‘Digital Banks vs Traditional Banks’ will help you make a sound decision.

1. What is the difference between traditional and digital banking in the Philippines?

Before anything else, let’s differentiate these two banks in the Philippines.

Traditional banks are known as Brick-and-Mortar Banks. These are the banks that you are familiar with and they are scattered almost everywhere in town where you live or work. They are considered as the original banks.

But just like any other service provider in today’s world, there will be a time for improvements and innovation –

and the outcome is *poof* DIGITAL BANKING.

Digital banks are those that are purely online.

This innovation has convinced a lot of business owners and financially-savvy people to switch from traditional to digital banking. I have made the switch too, I’ll share more about this later. And I know most of you readers would somehow want a structural guide to know the differences between the two.

2. Digital Banking in the Philippines

Admittedly, I’ve switched to Digital Banking too, but with reservations.

As a former bank employee, I am used to the typical move of parking my entire Emergency Fund (EF) in a traditional bank’s savings account. But, with the attractive and ‘shining- shimmering- splendid’ benefits of digital banks, I’ve somehow scattered a portion of my EF and a huge chunk of my son’s personal savings in some digital banks (until further notice).

The digital banks I currently have an account with are ING and CIMB. As much as I would want to experiment with others, what you don’t know is that I used to be sort of paranoid when I first tried out digital banking.

It’s funny because whenever I hit the ‘Send’ button to transfer money, I felt like it would somehow vanish in the process and wouldn’t reflect on the other platform’s end. Or what if I deposit a substantial amount tonight and then wake up with half of my balance missing?

Of course, I needed to snap out of that funk and rely on the ‘facts’ and not just on the whine-fests and hearsays from negligent users.

Thank goodness! My fear for these contingencies has long been banished and addressed properly. And so, in this post, I’ll be sharing with you the facts (what you should know), how I transitioned from traditional banks to digital banks with ease, and what you can do take advantage of this technology-based platform.

Why? Because whether we fully immerse and ride the techno wave or not, I firmly believe that the banking industry in the PH is heading towards a cashless and platform-based society.

3. Digital banks vs Traditional banks in the Philippines, which one is better?


Both digital and traditional banks are covered by the PDIC up to P500k per depositor, and both must have a license from the Bangko Sentral ng Pilipinas. By knowing this information, we can safely say that a certain bank is legit.

Physical Appearance

Probably the most notable difference would be your physical presence in administering a transaction.

Being physically present in a bank or not is such a game-changer!

A traditional bank has different branches located across the country where it operates. You have to go to the nearest bank to make a deposit and withdraw money. These traditional banks also have their own ATMs where their clients can withdraw money instantly. They also offer online and phone banking.

As to digital banks, they have no physical branches since they are purely online. Anything you need can be done at home in your underwear. LOL! That includes opening an account and depositing a check.

But what I noticed is that they do not offer their own ATMs despite them advertising their own ATM debit cards.

As of this writing, to withdraw your funds, you need a 3rd party, meaning you need to transfer it first to a traditional bank or other financial institutions and then withdraw it from their ATM.

Nevertheless, if you need to pay bills, send money to your loved ones, see your balances, manage your savings account, or simply do online transfer, all these can be done both with digital banks’ mobile applications and traditional banks’ online and phone banking.

Savings Interest Rates and Maintaining Balance

Having a savings account in a traditional bank requires you to have a specific maintaining balance. Now if you aren’t careful, they may charge you a ‘below maintaining balance’ fee.

The interest rate per annum usually ranges from 0.25% to 1.5%. Mind you, their rates for savings and time deposits have plummeted drastically ever since the pandemic scare had begun.

Our pre-pandemic rate in a provincial bank

Above is a screenshot of our time deposit rate in a provincial bank. Pre-pandemic, it played around 2% to 2.5%. Take note, medyo mataas na yan sa traditional banks. But upon confirming our latest rate with the new accounts associate two months ago, it had dropped down to a staggering 0.90%. Oh boy!

While with digital banks, you will not be required for a maintaining balance. Yeah man! You can open an account without a single penny. Your entire account balance can be withdrawn whenever you want without ever thinking of incurring withdrawal fees.

And to add to the good news, they actually give higher interest rates per annum, which ranges from 3% to 4% per annum. I mean, isn’t that just a beautiful sight to behold?

This, for me, happens to be the most enticing feature they have. I mean, who wouldn’t want a taste of a higher interest income when all you need to do is let your money sit idly in their platform and let your own money work hard for you?

Note: In order for traditional bank deposits to have the same rates as digital banks, you need to deposit at least a million pesos.

Ever wondered why digital banks can offer higher rates?

Digital banks have lesser overhead costs. They don’t have numerous branches nationwide and have lesser bank tellers and officers. Thus, they don’t need to shell out a ginormous amount for monthly rent, electricity, maintenance, advertising, and payroll for employees.

Account Opening

Opening an account in a traditional bank requires plenty of identification and papers such as IDs, proof of income, and documents that prove your address. Affixing your signature on multiple forms is just too redundant. Hello, sore hand!

I’ve said this a million times in my other posts. I loathe long lines. I mean who doesn’t?

From my experience, the calculated time you spend in a branch – from the time you set foot inside until you literally have opened an account – is 45 mins. Add an extra 30 mins to one hour IF, and only if, there is a long queue waiting line ahead of you.

What’s good with them is that they will let you choose the type of account you want to open. But in exchange, like mentioned above, you need to provide an initial deposit with a designated amount for your chosen account.

When opening an account with a digital bank, there is usually only one type of account. To start the processing of your application, you will be required to download the mobile application in your phone and start filling out the online forms.

Filling out forms virtually can go as far as taking a selfie with an appropriate background, signing on a piece of paper and taking a picture of it, and finding some good lighting in your house.

This could take you around 10 to 15 mins provided you have good internet connection. And oh, let’s not forget, you could totally do this at home!

Bank Transactions

This is particularly with depositing checks.

With traditional banks, you need to go to the branch yourself and hand over the check.

With digital banks, you can deposit a check by just taking a picture of it and sending it through their mobile app.


Digital banks are purely online, making them more susceptible to cybersecurity issues. But let’s not fret. I’m pretty sure the back-end employees have provided sufficient security in their servers to prevent financial catastrophes or total loss of data.

Unlike traditional banks, they have physical documents as a back-up in case of security issues.

Tip: Have your own paper trail. What I do is, for every successful transaction, I always take a screenshot of the amount and reference number, along with a screenshot of my balance. In case any conflicting issues arise, I have my proof.

Convenience for contingencies

Just so you know, the weakness of these digital banks is the internet connectivity. If you happen to not have any connection in case of emergencies well yeah, that might be a problem.

So yeah. The best solution is to don’t put your eggs in one basket. Have some cash at home and in a traditional bank. Or better yet, avail of your digital bank’s physical debit card for faster withdrawals.

hands people office technology

Customer Service

Traditional banks hold on to “in-person” customer service to provide more safety and trustworthy operations. So if you gotta file a complaint and need some human interaction with the bank, you can head straight to their nearest branch and questions/clarifications will be handled by the attending clerk.

No need to send emails and wait for a CSR or automated chat support to reply to all your queries (unless instructed).

For digital bank account holders having complains, they can just create a support ticket or chat with the reps from the mobile application. You don’t really need to go to their office. But I think that’s the downside. They lack in-person support.


Read this: Everything has RISKS. Heck, even not taking one is a big risk itself!

By risk, you might be referring to it being a fully-digital bank?

Yes, phishing and scam websites are everywhere. But then again, even the biggest traditional banks have risks for cyber-attacks/hacks. I guess it’s a matter of reading instructions carefully and not being gullible enough to fall for traps and scams.

I’ve had the same concern as you. But I have gradually embraced digital banking this year.

4. So here’s what I did

I separated my Emergency Fund allocation into two savings accounts – one with BDO and one with ING.

Nonetheless, having two EF savings can give you that much-needed peace of mind. In case the digital bank is under maintenance, you at least have a back-up fund readily available in a traditional bank.

First, I divided my EF and put a small portion/percentage first in my ING account and the larger portion intact in BDO.

As I gained confidence while learning the ins and outs of navigating digital banks, I gradually increased the allocation to my ING from my BDO.

If you feel apprehensive and would want to test the waters first, you can start with 80:20 then 50:50. Then once you get your feet wet and are comfortable, you can shift to 20:80, and so on.

With this approach, you can take opportunity of the higher interest yield in digital banks, while still maintaining a decent amount of your EF in a physical bank.

5. Tips for Banking in the Philippines

I use both digital and traditional banking – for my peace of mind. I’d maintain both types of banks: Digital, for convenience and higher interest rates, then traditional, for the customer-centric services for more safe and trustworthy transactions.

If you’re wondering, my joint EF with the hubby is placed in a traditional bank. A portion of my son’s personal savings is with CIMB through Gcash which I plan to gift to him when he’s around 6 years old. Yes, the high-interest rates are not something you can just push aside and let the world pass by.

In my observation, technologically inept people or those born in the 70s would prefer traditional banks. Millenials and Generation Z babies (born in 1981 onwards) are leaning more on the digital side.

Note: In case you want to open a CIMB account through Gcash, you can use this link:

6. Is Digital Banking in the Philippines safe?

So overall, is it safe to use digital banking in the Philippines?

My straightforward answer is “Yes.”

Remember, every transaction online, regardless if it’s banking-related or business, will be safe “if” you know how to protect yourself from the thieves and add security to your account.

Digital banking is a complete innovation for faster money transactions and safer money transfers. You can always select the best digital bank that may suit your needs.

If you have a business and you need fast and convenient money transactions, better choose digital banking as your medium. Not only does it save you time, but also helps your business accept money transfers internationally in just a few clicks.

I hope this guide, ‘Digital Banks vs Traditional Banks’ has helped you make a sound decision towards reassuring your finances. And I hope you start embracing the future of banking as early as today.

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Digital Banks VS Traditional Banks Philippines. Which is better?

By Ameena Rey-Franc

Recognized as one of the Top Finance Blogs in the PH. Ameena Rey-Franc (founder of TTP) is a former Banker and BS Accountancy graduate turned Blogger, Keynote Speaker, and entrepreneur. Currently an RFP delegate, she is also the Author of a book about Financial Resilience and has held seminars for reputable companies like GrabFoodPH, Pru Life UK, VISA, JPMorgan Chase& Co., Paypal, Fundline, Moneymax, and many more. The Thrifty Pinay's mission is to empower women to LEARN, EARN, and be FINANCIALLY-INDEPENDENT no matter what life stage they are in.