It's not much, but savings accounts offered by traditional banks do provide interest.
Based on price comparison site iMoney, the savings account interest rates offered by local traditional banks range from 0.1 percent to as much as 1.75 percent on an annual basis. This means that if your bank account has an average savings amount of P50,000, your money will earn a measly P50 after a year if the bank provides the 0.1 percent rate. If it gives a 1.75 percent interest rate then your money can earn P875 over the course of 12 months.
The variation largely depends on the maintaining balance demanded by a specific savings account type. For that 1.75 percent yield, the bank requires the account holder to maintain a balance of P30,000 monthly.
To be fair, savings accounts are not entirely meant to be investment instruments. But wouldn’t it be nice to see your money grow even when you’re just keeping them safe somewhere? Or perhaps, in a mobile app?
Mobile wallet GCash quietly rolled out this very instrument to select users this week. In its newest bid to turn cash-loving Filipinos to go cashless, GCash, in collaboration with regional bank CIMB, has launched a savings account feature inÂits app.
Existing GCash users, which the company claims now number at 20 million, can save as much as P50,000 in the app and see their money earn 2.3 percent in the course of 12 months. Like a traditional bank, the deposits are insured by the Philippine Deposit Insurance Corp.
“There’s no minimum balance [to keep a savings account in the app]. And there’s no minimum balance to qualify for the 2.3 percent interest rate. So, even if you have P1 in the account, you can already earn 2.3 percent off of that,” Patrick Cuartero, CIMB’s chief marketing officer said.
CIMB, which is based in Malaysia, is one of the leading banks in the region with presence in 16 countries including China, Hong Kong, India, and South Korea. It recently launched in the Philippines as the country’s first fully digital bank with no physical branches. Most ofÂthe bank's services are accessed through its own app.
While unconventional, CIMB’s strategy is unsurprising especially in the Philippines where 70 percent of its population, or at least 70 million people, are online. This is higher than the world’s average Internet penetration rate of 59 percent. That number is also much higher than the number of Filipinos that own a traditional savings account at around 15.8 million, according to Bangko Sentral ng Pilipinas (BSP).
CIMB’s strategic partnership with GCash may also allow it to gain new patrons for the banking service, as one of its executives said GCash’s savings account may eventually be merged into a traditional bank account.
For now, GCash’s mobile savings feature is still in beta version, although the app’s executives said it will most likely be fully available to all users this April. For GCash users who already have access, setting up a savings account can be done in around 10 minutes. A GCash account holder only needs to fill out a single page form for verification processes and a savings account will be put up in minutes.
To be sure though, this does not mean that only GCash users may sign up for the product. New users may sign up for a GCash account and they may already apply for a savings account right after.
This story originally appeared on Esquiremag.ph.
* Minor edits have been made by the Entrepreneur.com.ph editors.