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The banking system in the Philipines, spearheaded by the BSP (Banko Sentral ng Pilipinas), has been made more accessible with the help of the rise of social media and the internet in general amongst Filipinos.
However, even with the ubiquitous presence of information regarding our banking systems, may it be traditional or online/e-banking, a lot of our fellow citizens still find it hard to open a bank account and still struggle to filter out false information online.
Having said that, hopefully, this article presents you with the information you need to help you decide on how to go about your banking needs and pick the best bank and service that suits you.
What is a bank?
To simplify things, A bank is a financial institution that has been given a license to receive checking and savings deposits and make loans. These institutions are usually regulated by the national government or a central bank.
Common services provided by banks include personal & business deposit accounts, certificates of deposits, currency exchange, and loan services to name a few.
Furthermore, there are several types of banks such as retail, commercial (corporate), and investment banks.
What does a Bank actually do?
Most people know that a bank is a place where you can save your money securely. However, a bank does more than that. Basically, banks are financial institutions involved in both the borrowing and lending of money.
Customers make a deposit into their account and are paid an annual interest by the bank. The money that is deposited is then lent to other customers for different types of bank loans.
The bank’s profit margin is determined by the interest rates that they pay their deposit customers and the interest rates that their loan customers have to pay.
Banks play a significant role in the economy. Aside from providing a service for those who wish to save, banks also offer finance to businesses that would like to invest and expand. These business investments and loans enable economic growth.
Banks have four basic purposes:
1. Keep customers’ money safe
Most people think that depositing their money at the bank is a much safer way to keep their cash than placing it somewhere else, like under their bed.
In the medieval period, people used to pay early banks, such as the Knights Templar, for the safekeeping of their money and assets. Banks also give people peace of mind about money.
The Bank of England guarantees commercial banks in the UK as a lender of last resort (LOLR), so people think their money is safe at the bank.
2. Offer interest on deposits and help protect money from losing value due to inflation
In the case of commercial banks, customers are paid interest on their deposits. While it may be very low for current accounts, the interest rate is often significant for saving accounts. During inflation, the actual value of your savings can be maintained by interest rates on deposits.
For example, if the inflation rate is at 4% and you keep your cash, the real value of your savings will decrease. However, if you deposit your money at a bank that pays a 6% interest rate, your savings will increase in value.
Some bank customers, like pensioners, earn income from interest payments on their savings.
Current Account vs. Savings Account
With a current account, you can access your money easily and quickly. You can withdraw your money at short notice and the account will have features, like a debit card and ATMs.
Current accounts usually come with very low-interest rates because the bank has to keep sufficient liquidity.
On the other hand, a savings account (or time deposit account) typically has limits on how much money you can withdraw at a time.
Banks often require customers to give notice (e.g. seven days in advance) if they want to withdraw their money. This allows banks to pay interest at a higher rate since there is less liquidity needed.
3. Lend money to firms and other customers
A bank can generate more profit by lending a portion of its deposits to other customers.
For example, a bank pays an interest rate of 2% on bank deposits. However, it lends money to customers at 6%. This means it can make a profit on its deposits.
It is important to note, though, that a bank needs to maintain sufficient liquidity in order to meet the customers’ demands to withdraw money.
4. Offer financial advice and other financial-related services, like insurance
Banks can offer consumers quick access to cash (through ATMs), financial advice, ways to make international payments and special offers, such as free travel insurance with a current account.
Types of Banks in the Philippines
There are many types of banks operating in the country. Understanding what these banks are, including their functions, can give you a better understanding of how they can help you.
Universal & Commercial Banks
Universal banks are banking systems that offer a wide array of financial and banking services under one roof.
This can include investments, commercial banking, development banking, and even insurance. They also offer deposits, payment processing, underwriting, asset management, credit cards, loans, and factoring, among other services.
Meanwhile, commercial banks comply with all the basic needs of customers. Regular services such as current and savings accounts and credit are offered by commercial banks.
Although commercial banks can give services to individuals, it highlights serving and supporting businesses. Both small businesses and large corporations can rely on these banks for their different needs.
- Most banks offer digital and offline banking
- Tons of services available
- Long queues in branches
- Low-interest rates for savings accounts
- May have hidden fees
Top universal and commercial banks in the country include:
- Asia United Bank Corporation
- Bank of the Philippine Islands
- BDO Unibank, Inc.
- CIMB Bank Philippines Inc.
- East West Banking Corporation
- Philippine National Bank
- Security Bank Corporation
- Union Bank of the Philippines
- Robinsons Bank Corporation
Also called Savings and Loan Associations or S&Ls, this type of bank is a type of financial institution that offers savings accounts and helps people to become homeowners.
These banks can be owned by shareholders and customers.
- Low balance requirement
- Low interest on loans
- Accessible to everyone
- Fewer physical branches
- Not as suitable for businesses
- Limited services
Top thrift banks in the country include:
- AllBank (A Thrift Bank), Inc.
- Bank of Makati (A Savings Bank), Inc.
- BPI Direct BanKO, Inc., A Savings Bank
- CARD SME Bank, Inc. A Thrift Bank
- City Savings Bank, Inc.
- Luzon Development Bank
- Sterling Bank of Asia, Inc. (A Savings Bank)
- Quezon Coconut Bank, Inc. (A Thrift Bank)
- UCPB Savings Bank
Rural & Cooperative Banks
As its name suggests rural banks are popular in rural areas and communities. The major function of these banks is to provide basic financial services and offers to residents to promote and expand the economy in the best way possible.
Meanwhile, cooperative banks are similar to rural banks, but the ownership is different. While rural banks are privately managed and owned, cooperative banks are owned and organized by a federation of cooperatives. These banks are integral, especially for farmers.
- Offers personalized services
- Has competitive interest rates for savings
- Lower interest for loans
- Limited services
- Inconvenient for frequent travelers to perform transactions
- Limited branches
Top Rural banks in the Philippines include:
- Agribusiness Rural Bank, Inc.
- Anilao Bank (Rural Bank of Anilao (Iloilo), Inc.
- BDO Network Bank, Inc. (A Rural Bank)
- Card Bank, Inc. (A Microfinance – Oriented Rural Bank)
- Cantilan Bank, Inc. (A Rural Bank)
- East West Rural Bank, Inc.
- CARD MRI Rizal Bank, Inc., A Microfinance-Oriented Rural Bank
- Caritas Banco ng Masa, Inc. (A Rural Bank)
- Maritime Bank Corporation (A Rural Bank)
- Mindanao Consolidated Cooperative Bank
Digital Banks & Neobanks
Digital banks are online services provided by traditional banks. In recent years, the digitization of bank services has become crucial, especially due to the pandemic. This is made possible through advanced automation, security, and programming.
Meanwhile, neobanks are financial providers that are entirely digital. Unlike digital banks, they do not have a physical branch. These banks usually offer a wide range of services that are geared towards tech-savvy individuals.
- Accessible to anyone with an internet connection
- Offer competitive interest rates for savings accounts
- Usually requires no minimum deposit/maintaining balance
- Neobanks have no physical branches
- Depositing and withdrawing cash can be inconvenient since there are no dedicated ATMs
- Limited customer service
Top Digital banks in the Philippines include:
- GoTyme Bank Corporation
- Maya Bank, Inc.
- Overseas Filipino Bank, Inc., A Digital Bank of LANDBANK
- Tonik Digital Bank, Inc.
- Union Digital Bank
- UNObank, Inc.
Non-banks with quasi-banking functions
Also called NBQBs, these are financial institutions that are engaged in borrowing funds from more than 20 lenders for the borrower’s account through endorsement, issuances, or assignment with acceptance of deposit substitutes for re-lending or purchasing receivables, and other obligations.
They facilitate investment risk pooling, market brokering, risk pooling, and contractual savings.
- Easy application
- Quick fund access
- Hidden fees
- High-interest rates
Here are some of the top NBQBs in the Philippines:
- RCBC Capital Corporation
- RCBC Leasing and Finance Corporation
- Toyota Financial Services Philippines Corporation (TFSPH)
- Cebu International Finance Corporation
- Philippine Depository and Trust Corporation
What are the banking services available in the Philippines?
What is the difference between checking and savings accounts? A checking account is opened for the purpose of accessing your money for immediate use or for your everyday expenses.
Checking accounts are also considered “transactional” which means that you are allowed to access your money anytime and anywhere you need it.
A savings account, on the other hand, is usually opened with the purpose of saving money.
Both accounts allow you to access your money but it is just easier to access it with a checking account. Also, a savings account has a limited number of withdrawals that you can make each month.
Additionally, savings accounts are usually age-restricted (18 and above) and the need for a guardian or parent as a co-owner is a must.
This is simply a card that is issued by a bank or financial services company that allows you to borrow funds to pay for goods and/or services.
But this borrowed money comes with interest so cardholders should and are expected to be able to pay it back when it is due.
This is a secured loan that is given to you to help you purchase a property by offering it as collateral and then after you’ve made the complete payment, your property’s title will then be transferred back to you.
This loan allows you to borrow money to help you purchase your dream car. These are usually simple-interest loans that can be usually paid back in two to five years.
This allows you to buy a vehicle that may be too expensive for you and make it somewhat affordable by breaking it down into monthly payments.
This is usually for people who want to start a business but do not have the capital to start it up.
There are different types of business loans such as bank loans, mezzanine financing, asset-based financing, invoice financing, microloans, business cash advances, and cash flow loans.
Same as with other loans, you will be asked to pay this back via monthly payments and it also comes with interest.
These are loans made by people to use for a variety of personal reasons like home renovations, wedding funds, vacation trips, and many more.
As with other loans, this will be expected to be repaid over time with interest with some lenders charging additional fees.
Online banking allows you to do transactions via the internet it is also known as internet banking or web banking.
Popular online banking apps such as Maya and Gcash app are often used by Filipinos to purchase everyday essentials in the comfort of their home or on the go.
Online banks can do almost anything traditional banks can do, especially now when contactless transactions are a must in some places.
These transactions are often done using personal computers or on a mobile phone/smartphone. This makes paying monthly dues like online banking loans (ie. G-Credit) and/or subscriptions very convenient but be wary of some services that require you to pay for a convenience fee or service fee.
However, things like applying for mortgages, some wire transfers, bank drafts, and traveler’s checks are only allowed to be done in a traditional bank.
Fund Transfers & Cash Management
Fund Management Solutions (Asset Management)
This is the way of overseeing and handling one’s cash flow or sometimes a financial institution’s cash flow. The fund manager ensures that the schedules of all the deposits under their watch coincide with the demands for loans.
A fund manager also ensures that your cash flow is optimized and also helps you capitalize on opportunities that can increase your cash flow while also ensuring the proper liquidity of your funds
Deposit Inquiry Services
This is done every time you want to check on your remaining balance. Usually, this is done by sending a text/SMS to your bank in a specified format for a specific term deposit account.
Account Transaction History
This is your detailed transaction history. It shows your account’s available or current balance for a certain month and also the total amount of deposits and withdrawals for the same period.
Bank Statement Downloading
This is a way of accessing your bank statement that is in an official document that summarizes your account’s activity for a given amount of time(usually in a given month).
You will find a record of all your transactions (Deposits and withdrawals) to help you be on top of your finances.
SOA (Statement of Accounts) Downloads
This is a document that shows you all your transaction with a given entity within a given period of time.
SOAs come in different formats like the MT940 format that is used by the SWIFT network to send and receive bank account statements at the end of the banking day while the MT950 format is the account statement that is to you by your bank.
Fund Transfer to Own Accounts
This is a transfer of funds between your current account and settlement account that is maintained by your bank.
Payments Management Solutions
These are solutions to support any business in the process of payment management by streamlining and/or offering automation by using payment management software.
This reduces the time needed and avoids human error.
Payroll Crediting Service
This automates the process of paying employees making their pay almost immediately available to them (see the best Payroll accounts in the Philippines).
Auto-Credit arrangement (ACA)
This allows you to deliver your payment file instructions via file upload to your bank.
Fund Transfer to Third-Party Accounts
This is a feature that is used to transfer funds from your bank account to another person’s account. This is sometimes called the “credit-push system”.
Fund Transfer to Other Banks (via PESONet and Instapay)
A service that allows you to transfer your funds to other banks that comes with a service depending on which bank you plan to transfer the funds to.
Manager’s Check Cutting Service
This is a service that allows corporate customers to completely look for or outsource their check preparations without compromising security or their control using a manager’s check.
Corporate Check Cutting Service
Same as the Manager’s check cutting service but this uses corporate checks instead.
Collections Management Solutions
Helps financial institutions handle scale up their collection departments so some turn to automating collection through the use of software.
Auto Debit Arrangement (ADA)
Payment service that allows your bank to automatically collect credit card payments from your own Checking Account or Savings Account.
Direct Fund Transfer
This allows you to directly transfer funds to other bank accounts usually done using banking apps on mobile.
Deposit Pick-Up Service
A service where your bank sends a representative on an agreed schedule to your designated office or establishment to collect deposits.
Post-Dated Check Warehousing Facility
A service where your bank safely keeps your post-dated checks by using a standalone system and credits your checks to your account when the value date is due.
Allows you to pay your bills without the need to go to the specific institution’s establishment. This is now usually done via online banking.
SOA Reference Facility
This allows you to check on your Statements of account for a given specific time which is usually done monthly.
Email SOA Facility
Statements of accounts sent via email.
BancNet – BIR Electronic Filing System and Payment System
This allows you to pay taxes without the need to physically be present.
The filing of tax returns and payment of tax liabilities by large corporate taxpayers, professionals, and individuals may now be done through BancNet’s multi-bank payment gateway.
Related: How to Register a Business in BIR
BancNet – eGovernment Facility (SSS, Pag-IBIG, and PhilHealth payments)
You can now use BancNet’s centralized online facility to pay your monthly dues to these institutions without leaving the safety of your home.
The Unit Investment Trust Fund is an open-ended pooled trust fund. This means you can invest or withdraw your investments at any time (still depends on the agreements outlined in the UITF Declaration of Trust).
You can participate in this investment by purchasing units of participation in the fund. These units are the representation of the investor’s amount of beneficial share in the total value of the fund you can purchase units of participation based on the Net Asset Value per Unit (NAVpU) of the fund for the day.
The Net Asset Value (NAV) is the total market value of the investments of the fund with fewer expenses such as taxes, fees, and other qualified charges. The NAVPU is calculated by dividing the fund’s NAV by the number of outstanding units in the fund.
To know how many units of participation a certain amount of investment is equal to, you can simply divide the amount to be invested by the prevailing NAVPU for the day. You can access NAVpUs through the websites of the bank or financial institution you plan on doing your investments with.
- Corporate Bonds – A corporate bond is a type of debt security that is provided by a financial institution and is then sold to investors. By doing this, the company gets to collect the capital it needs, and then the investor is paid a pre-established number of interest payments with a fixed or varying interest rate. When the bond reaches its expiration date, or in banking terms, “reaches maturity,” the payments stop, and the initial investment is returned to the investor.
- Treasury Bills – Sometimes called Government Bonds are used when the government goes to the financial market to raise funds for a short period. These bills can only be given by the central government and the included interest is based on the market.
- Retail Treasury Bonds – This is a medium to long-term debt issued by the Republic of the Philippines (ROP) to fund high-priority projects nationwide and to help diversify funding sources.
A contract between an insurer and you a policy owner. A life insurance policy guarantees the insurer pays a sum of money to your named beneficiaries when you pass away in exchange for the premiums you paid during your lifetime.
A contract between you and the insurer that protects you against financial loss if you are suddenly involved in an automobile accident or if you become a victim of theft.
A contract that requires your insurer to shoulder some or all of your personal healthcare costs(medical, surgical, prescription drug, and sometimes even dental expenses) in exchange for a premium payment.
A foreclosure happens when a home or other property is seized and put up for sale by the lender.
When you see a property listed as foreclosed this simply means that it is now owned by the lender this usually happens when the previous owner fails to fulfill the payment needed by the lender.
This is a personalized financial service and product offered to high-net-worth individuals (HNWI) of a retail bank or other financial institution.
It includes a wide range of wealth management services all provided under one roof. Services such as investing and portfolio management, tax services, insurance, and trust and estate planning.
Safety Deposit Box
A safe deposit box or safety deposit box is a secured container, usually made of metal, that stays in a safe or vault of a bank. These are used to keep a wide array of items safe, such as important documents and jewelry.
Top Banks in the Philippines in 2022
Banks lend money to people and businesses. Banks are amongst the cornerstones of society.
With money, buildings, companies and businesses are born, hence, employment becomes available throughout society.
The four primary types of banks in the Philippines are as follows:
- Universal and commercial banks – offers the widest range of financial services. Operates across cities and countries.
- Thrift banks– Are known to invest savings acquired from depositors.
- Rural and cooperative banks – banks invested in developing rural economy and communities.
- Non- banks with quasi-banking functions– offers limited services because of a lack of a full banking license, but is still able to provide bank-related financial services.
Some of these banks have been around throughout different phases of Philippine history, and behind these banks, The Banko Sentral is the overseeing monetary authority that supervises operations, activities of all banks in the Philippines.
The Banko Sentral also issues directive policies so that banks may have provisions on gains and losses on loans, cash flows, how to deal with bankruptcy, and all the workings and innings of investments.
Below is the list of the top banks in the Philippines, ranked by deposits (deposit liabilities) – as of March 31, 2022, via The Banko Sentral ng Pilipinas1 (amounts in Million Pesos).
|1||BDO UNIBANK INC.||P2,740,884,879,542.66|
|2||LAND BANK OF THE PHILIPPINES||P2,445,131,002,273.60|
|3||BANK OF THE PHIL ISLANDS||P1,881,563,692,021.60|
|4||METROPOLITAN BANK & TCO||P1,767,267,058,640.77|
|5||DEVELOPMENT BANK OF THE PHIL||P839,654,502,123.72|
|6||PHILIPPINE NATIONAL BANK||P867,378,786,025.34|
|7||CHINA BANKING CORP||P796,542,521,530.87|
|8||RIZAL COMMERCIAL BANKING CORP||P676,821,710,647.16|
|9||SECURITY BANK CORP||P532,300,582,042.40|
|10||UNION BANK OF THE PHILS||P512,529,423,375.52|
|11||EAST WEST BANKING CORP||P303,063,256,660.23|
|12||ASIA UNITED BANK CORPORATION||P256,674,049,754.30|
|14||BANK OF COMMERCE||P173,624,766,192.08|
|15||PHIL TRUST COMPANY||P146,667,435,360.91|
|16||HONGKONG & SHANGHAI BANKING CORP||P146,855,088,980.14|
|17||ROBINSONS BANK CORPORATION||P135,963,591,288.01|
|18||PHIL BANK OF COMMUNICATIONS||P91,698,930,715.76|
|19||MAYBANK PHILIPPINES INCORPORATED||P69,146,050,838.50|
|20||MUFG BANK, LTD||P67,833,610,030.54|
Banco De Oro is a banking company based in Makati City Philippines. This is the largest bank in the country and the 15th largest in Southeast Asia as of March 31, 2016.
- Lending (corporate and consumer)
- Foreign Exchange
- Trust and Investments
- Credit Cards
- Retail Cash Cards
- Corporate Cash Management and Remittances in the Philippines through its local subsidiaries.
- Investment Banking
- Private Banking
- Leasing and Finance
- Rural Banking
- Life Insurance
- Insurance Brokerage
- Online and Non-Online Brokerage services.
Total Assets (as of March 2022): P3,530,797,416,359.39
Total Liabilities (as of March 2022): P3,102,207,685,727.68
Land Bank of the Philippines is a government-owned bank in the Philippines that specializes in providing for the needs of farmers and fishermen so it is also considered a specialized government bank aside from giving services similar to a universal bank.
- eTax payment system
- Credit Cards
- Land Transfer assistance
- Extensive Agricultural Lending Programs
- Housing and Mortage Programs
- International Trade
- Investment Banking
- Trust and Investments
Total Assets (as of March 2022): P2,788,780,740,687.70
Total Liabilities (as of March 2022): P2,570,425,833,337.38
The Bank of the Philippine Islands is the first bank in the Philippines and also the first in Southeast Asia.
It is the fourth largest bank asset-wise and the second largest bank in terms of market capitalization, and one of the most profitable banks in the Philippines
- Consumer banking and lending
- Asset management
- Securities brokerage and distribution
- Foreign exchange
- Corporate and Investment banking
Total Assets (as of March 2022): P2,355,209,596,199.84
Total Liabilities (as of March 2022): P2,057,843,338,027.92
The Metropolitan Bank and Trust Company is the second largest bank in the country and it is the commercial and retail banking arm of GT Capital Holdings inc.
- Corporate, Commercial, and Consumer Banking
- Credit Card
- Investment Banking
- Trust Banking
Total Assets (as of March 2022): P2,384,541,482,829.82
Total Liabilities (as of March 2022): P2,091,776,191,343.87
The Development Bank of the Philippines is a state-owned development bank located in Makati City.
This bank was established after the Second World War in 1947 with the government’s effort to rebuild the country’s post-war infrastructure.
- Import and Export
- ServicesTrust Banking
- Traditional and Electronic-based Remittance
- NCO Collections for the Bureau of the Treasury
- Payroll Servicing
- Corporate Banking
- Investment banking
Total Assets (as of March 2022): P1,065,040,755,353.47
Total Liabilities (as of March 2022): P990,412,909,423.23
The Philippines National Bank is one of the largest banks in the country. Established by the Philippine Government on July 22, 1916, during the American occupation.
- Bill discounting
- Trade finance
- Foreign exchange dealings
- Fund transfers
- Remittance servicing
- Asset management
- A full range of Retail Banking
- Trust services
- Treasury operations.
Total Assets (as of March 2022): P1,138,695,287,395.12
Total Liabilities (as of March 2022): P984,956,236,587.57
China Banking Corporation is a Filipino bank established in 1920. It was the first privately owned local commercial bank in the Philippines that was first built to cater to the banking needs of Chinese Filipino businessmen and women.
- Thrift banking
- Investment banking
- Insurance Brokerage
- Bancassurance through subsidiaries
- China Bank Savings
- China Bank Capital
- China Bank Securities
- Chinabank Insurance Brokers
- Manulife China Bank Life Assurance
Total Assets (as of March 2022): P1,036,604,465,292.50
Total Liabilities (as of March 2022): P916,986,283,171.25
The Rizal Commercial Banking Corporation is one of the largest universal banks in the country. It was established in 1960 as a development bank.
- Commercial, corporate, and consumer lending products
- Cash management products
- Treasury products,
- Remittance services
- Digital and mobile services
Total Assets (as of March 2022): P952,558,814,287.59
Total Liabilities (as of March 2022): P843,844,674,642.74
9. Security Bank
This is a universal bank in the country that was established on June 18, 1951, as a security bank and trust company. It was the first private and Filipino-operated bank post-World War II period and it was first publicly listed on the Philippine stock exchange in 1995.
- Foreign exchange
- Stock brokerage
- Investment banking
- Asset management through its subsidiaries (as of December 31, 2017):
- SB Cards Corporation
- SB Capital Investment Corporation
- SB Equities, Inc.
- SB Forex, Inc.
- SB Rental Corporation
- SBM Leasing, Inc., a joint venture with Marubeni Corporation of Japan, and SB Finance Company, Inc. (formerly Security Bank Savings).
Total Assets (as of March 2022): P724,831,754,864.13
Total Liabilities (as of March 2022): P602,383,718,243.83
10. Union Bank
Union Bank of the Philippines is the ninth largest bank in the country asset-wise. UnionBank is a joint consortium among the Aboitiz Group, Insular Life, and Social Security System (SSS).
- Deposit and related services
- Corporate and middle market lending
- Consumer finance loans such as a mortgage, auto loans, and credit card
- Capital market
- Trust and fund management
- Wealth management
- Cash management
- Electronic banking
Total Assets (as of March 2022): P745,488,511,103.30
Total Liabilities (as of March 2022): P643,492,826,148.13