Digital Payments Seen To Boost Post-covid Economic Growth And Recovery

The limitation of face-to-face interaction during the COVID-19 pandemic led most businesses and employers to find recourse in digital technologies to keep their operations running. The pandemic has been truly disruptive for industries. However, it also brought out opportunities that made options such as remote work, automation, and data-driven decision-making, among others, immediately feasible. The pandemic accelerated the adoption of technologies that could also ensure continuous growth and recovery in the new normal.

Among the most notable technologies that have seen growth during the pandemic is that of cash management services. BDO Senior Vice President and Cash Management System Head Carlo Nazareno explained that the importance of effective Cash Management Services (CMS), especially for SMEs, became undeniable during the pandemic.

“Cash management consists of the strategies and processes that allow businesses, from SMEs to the top 500 or top 50 corporations, to move cash around, to control cash flow. This includes the flow of money from customers to businesses and from businesses to their suppliers, and vice-versa,” he said.

Aligning business operations with consumer needs 

Globally, businesses have been investing in technologies to make their operations much smarter and most of the developments they introduce are to accommodate the demands created by new consumer behavior.

BDO Senior Vice President and Cash Management System Head Carlo Nazareno 

“Global trend for digital payments looks at what the customer is doing and what makes their lives easier. Now, countries are investing in making payments faster or in real-time. Real-time is the norm. No longer is the usual three-day clearing acceptable. Additionally, open finance and open banking are gaining traction, especially in technologically-advanced countries. Open finance means data is given openly to third-party providers so that they can use data for forecasting or for other means to make services quicker. As most consumers are used to accessing information real-time, open finance and real-time and faster payments allow them to access money in the same way,” Nazareno explained.

CMS allows businesses to transact easily and conveniently with their customers by also allowing for safe, secure, and real-time digital payments.  During the pandemic, businesses that can accommodate digital payments were more poised not only to sustain their operations but to also register growth.

Nazareno believes that digital and non-digital cash management systems will continue to be the norm in the coming few years. “SMEs in the Philippines, I am glad to say, have been very open for the most part to these developments in cash flow and cash management. Cash, face-to-face, and personal transactions will never disappear. However, the digital forms of these transactions will become a greater part of our new normal. We’ve had a taste of these benefits and advantages and we’re prepared to embrace them. For me, that’s a major part of the hopeful outlook for 2022,” Nazareno added.

Empowering crucial sectors for economic growth 

There are about 106,000 small enterprises in the country. Nazareno said it’s the small and medium enterprises that have the most dynamism, capital, and other resources that will help move the economy forward to recovery.

With the benefits that CMS can bring to businesses, BDO has been helping more SMEs with greater vigor during the pandemic. BDO offers reliable digital and non-digital cash management services for its clients. SMEs turned to BDO to set up online banking and online payment platforms. They also availed of automated check writing facilities, ATM payrolls, cash deposit machines (similar to an ATM but for businesses instead of individual depositors), cash deposit pick-up services (via armored vans), and other cash management services.

“Through these partnerships between SMEs and BDO, many businesses survived the pandemic and had the chance not only to stay open but to even experience modest to moderate growth during the pandemic. These past two years have been the best evidence that digital and non-digital cash management services help boost business growth,” Nazareno added.

BDO’s efforts to roll out CMS to businesses, especially to SMEs are aligned with the government's initiatives to boost economic growth and recovery in the new normal. The Bangko Sentral ng Pilipinas (BSP) launched its Digital Payments Transformation Roadmap 2020-2023 to provide policy directions as to how businesses and government can work together to convert 50% of the total volume of retail payments to digital.

Building an ecosystem 

BSP noted in its roadmap that the majority of Filipino consumers and businesses still prefer over-the-counter (OTC) transactions, citing that only one out of ten adults use their mobile phones for their financial transactions. Nazareno narrated that many of BDO’s clients went back to transacting in their branches and ATMs when the government eased its lockdown and quarantine restrictions.

Nazareno attributed these observed behaviors to the need for a more efficient digital payment ecosystem in the country. Going back to global trends on digital payments, businesses, banks, and the government have to work together to make digital financial transactions secure, faster, in real time, and more open.

“How we make information is important for us to promote a more transparent and reliable system not only for digital payments but also for inventories and supply chains. People want to know how things are moving and how things reach their intended destination securely,” Nazareno noted.

BDO ramped up with its efforts to diversify its cash management products. During the pandemic, it launched the BDO Pay, the bank’s own e-wallet, so that its users can go cashless with their financial transactions. With the app, those with BDO accounts can send money, pay bills, and request payment online. Aside from partnering with businesses to establish their own CMS, BDO expands the base of Filipinos who are comfortable using digital payments by allowing online opening of bank accounts.

“The entire ecosystem of how money moves around between where you have it and where you want it to be for you to have access to the services you want is not yet smooth. But BDO Pay makes things simpler because it automatically links your card and your bank account to an e-wallet. There’s no need to fund your e-wallet because it’s funded all the time,” Nazareno added.

As more banks roll out initiatives to make digital payments more seamless, more Filipinos may find ways to access financial products easier. In the end, Nazareno believes that it is the consumers who will benefit from these developments. As banks are being challenged to innovate and adopt newer technologies, it is the ordinary Filipino who gets to enjoy more options and more freedom on how to earn and spend their money.