Filipino consumers willing to allow banks to share data for Open Banking-based services – but privacy objections must be overcome for wide adoption
MANILA, PHILIPPINES, 19 March 2018 – New research from Unisys Corporation (NYSE: UIS) into the Philippine banking industry reveals that Philippine consumers are more willing to embrace new bank services based on emerging technologies such as Artificial Intelligence (AI) and machine learning than many of their Asia Pacific neighbours. They are also the most willing to support data sharing in an open banking environment, but only if privacy and security concerns are addressed.
Unisys APAC Banking Insights – Banking on the CX Factor is a study that provides insights into the attitudes of banking customers in the Philippines, Australia, Hong Kong, Malaysia and Taiwan. This year’s report explores how consumers feel about banks using AI to assess eligibility for credit cards and home loans, as well as sentiment toward banks sharing data with non-bank entities to offer new services.
Of the five countries surveyed, Philippine bank customers are the most frustrated by long bank queues, cited by 53 percent of Filipinos as the most annoying thing about their bank. Conversely, Filipinos are the least annoyed by having to repeat themselves to different bank representatives or from one channel – phone, internet or branch – to another. In the last year the proportion of Filipinos annoyed by their credit card being frozen or cancelled due to a suspected fraudulent transaction has fallen by two-thirds from nine percent to just three percent.
“With bank queues remaining the top annoyance for Filipino bank customers, there is a huge opportunity for Philippine banks to move more customer interactions to digital channels, including mobile. In addition to relieving pressure on the branches, artificial intelligence and machine learning can help banks make quick decisions and capture intelligence about customers to offer them more personalised and relevant services,” says Richard Parker, vice president financial services, Unisys Asia Pacific.
Balancing Artificial Intelligence with the Human Touch
The survey findings suggest that Filipinos are very willing to embrace tech innovations to enable digital bank services. More than half, 52 percent, of Filipinos are comfortable with their bank using software and algorithms to assess online credit card applications. When applying for a home loan this level of comfort falls to 41 percent, with 50 percent not comfortable. Even so, Filipinos recorded the highest level of comfort to apply for a home loan online of the five countries surveyed.
“Across all countries surveyed, consumers are more comfortable with online assessment for a credit card than a home loan. This suggests that there is an opportunity for banks to use smart software to lead decision making for commodity products such as credit cards. But they must understand that there is higher emotional involvement in a significant life event like a home loan and make a human option available for customers who want it,” says Mr Parker.
Age also impacts willingness to apply for bank loans online: “Filipinos aged 18-24 are the least comfortable applying for a credit card online. This may seem odd for tech-savvy millennials, but it is likely because they have less experience with lending and so require more human interaction to answer questions and provide advice,” explains Mr Parker.
Readiness for Open Banking
Open Banking is transforming the banking industry by allowing banks to share data with other organisations in order to offer new services to customers and new revenue streams for the banks. Regulations for Open Banking vary between countries, such as agreements among members of the Association of Southeast Asian Nations (ASEAN) as part of the ASEAN Banking Integration Framework (ABIF)1 that includes the Philippines.
Just over half, 52 percent, of Philippine bank customers are willing to allow their bank to share their personal data with other companies to access financial products (such as insurance, investment accounts and mortgages). This is the highest level of willingness among the five countries surveyed.
However, one in three Filipinos (31 percent) are not willing for banks to share their data with other organisations. The main objection reason is privacy (74 percent of those who are not willing). The Philippines is the only country where this group was more concerned about their bank’s security measures (46 percent) than the other company’s security measures (43 percent).
“For Open Banking to really take off in Asia, banks must first address customer concerns about how they protect their customer data – not just in the bank, but across all of the departments, partners and agencies in the value chain. The financial services industry is poised for a revolution enabled by innovative intelligent tech including AI, machine learning and automation – but it may take time from customers to be ready to come on the journey,” says Mr Parker.
Download full Asia Pacific Banking Insights survey results here.
Download infographic summarising Asia Pacific insights here.
Download infographic comparing willingness for banks to share data here.