Why rural bank customers are embracing digital transactions

In 2020, Filipino electronic fund transfer services Instapay and Pesonet exploded by an incredible 441% and 223% respectively – clear evidence that rural bank customers are demanding instant electronic transactions. 

It should come as no surprise. All over the globe, e-commerce is experiencing a boom due to the changing patterns of consumer and business behaviour.

Although e-commerce has gradually been adopted for more than twenty years, the COVID-19 pandemic unified the globe in the accelerated adoption of anything and everything digital.

Customers of rural banks are far from an exception. They still need have loans to repay, electricity bills to settle, and family members throughout the Philippines to send money, and remittances to receive from family members working abroad.

And those customers, particularly older ones, have become accustomed to doing things the old-fashioned way: take a walk to the local bank branch, have a teller perform the business for you, get a receipt and walk away content that you got a task done. An investment of one or two hours of your life. 

Enter the pandemic

During the COVID-19 pandemic, although you might manage to go to the store occasionally, bank branches were mostly closed, with no tellers to help you. But the world didn’t stop turning and your loans and bills were still patiently waiting for your payment.

When there is a pressing need, people will adopt new patterns of behaviour when there is a way to settle this need quickly – even senior citizens who can hardly be considered digital natives.

Once customers start using electronic transactions, even if they’ve been forced to by circumstance, they will soon find they’re performing their tasks relatively quickly – and even quicker each time they do it. By merely executing a transaction, they will get an immediate reward, which reinforces their behaviour.

Electronic transactions are usually executed from a smartphone using an app. But that is not the only way – indeed, rural banks are introducing electronic channels to their customers using many different methods.

For instance, electronic transactions can be executed though a local agent network – for example, a rural bank can do so through local shops or a sari-sari convenience store. Even older customers, traditionally wary of technology, can use critical banking services such as payments in a way in which they are more familiar. It requires no change in behaviour, and customers can still receive human interaction and assistance.

The compounded effect of this is that there will be no real way for customers to go back, even for older generations, to the old ways of doing business. Digital and electronic will become the default for everyone – sooner than any of us might expect.

Thinking about it 

Smart rural banks have already picked up on this trend. Some have introduced new electronic payment methods, some are in process of integration, while some are merely thinking of it.

If your bank is still in the “thinking about it” stage, make sure you don’t think too long, because your customers are demanding a solution today, and there are alternative choices out there from your competitors.

So, what is a prerequisite for any of those digital transactions, so that bank customers can perform their business without a teller, without physical access to the branch?

It’s simple: a core banking system that can easily connect to external electronic payment channels like Pesonet and InstaPay. That means:

• a trusted partner company with existing electronic payment channels already integrated with their systems 
• a way to connect external services such as InstaPay, PesoNet, ATM machines or any external agent network – anything that can secure uninterrupted Cash Flow for the Bank, through the means of loan repayments, deposits, bill payments, bank transactions or remittances. 

The power of partners

In the cloud-based core banking system, the means to connect external digital or electronic transaction channels is called an API.

You can’t connect to an electronic transaction system with just any old technical integration. Indeed, on its own, an API doesn’t solve your business need or guarantee customer adoption. Ideally, you need a trusted technical integration partner, and a team with the tools to help you adapt your API, train your staff, and launch your service.

A partner like Oradian has a business model that is tied to your business success. Schedule a free advisory session with one of our experts to get more insights on the growth of the digital payments industry, and what it takes to make it work for your bank.

If you’re interested in discovering how Oradian’s cloud-based core banking system can unlock growth for your business, get in touch with one of our business intelligence experts for a free overview of the Oradian system.