GoTyme Philippines enhances user engagement and retention

Nate Clarke, the president and CEO of GoTyme Bank, one of the six digital banks in the Philippines, discussed the company's track record in the country and the next step in retaining and engaging users to grow wallet share.

GoTyme is among the fastest-growing digital banks in the Philippines, adding about 250,000 new users per month through its hybrid distribution platform, which incorporates around 500 physical onboarding kiosks situated in the Gokongwei Group’s nationwide retail network. Around 60% of GoTyme’s customers are onboarded through these physical channels.

This approach, successfully adopted in South Africa in 2018 and brought to the Philippine market in October 2020, is becoming a key competitive component in customer acquisition among digital banks in the Philippines. As of July 2024, GoTyme had around 3.9 million depositors with a fully-verified accounts. Clark expects the bank’s user base will exceed five million by the end 2024. 

According to the TABInsights BankQuality consumer survey (BQS) conducted with more than 1,000 online consumers in the Philippines in January 2024, GoTyme achieved the second highest BQS score among digital banks with a score of 51%.  

The digital bank has gained traction with some of the biggest business process outsourcing (BPO) firms since 2023. However, the acquisition of SAVii, the largest fintech salary lender in the Philippines in May 2024, improved its capabilities. SAVii, with a loan portfolio of over PHP 3 billion ($51.9 million) and more than 500,000 employees across 150 corporations, will integrate its offerings with GoTyme to deepen customer relationships and expand market reach.  

It was in the payroll business that Clarke saw the bank making a difference. Payroll customers are highly valued in retail banking for their consistent funding and higher creditworthiness. GoTyme targets these customers, competing directly with established banks that aim to grow their personal loan businesses through similar means. In the Philippines, onboarding payroll employees into banking is cumbersome, causing friction for both human resources and employees. Limited branch hours and account opening caps can further restrict the process.

“Building a strong payroll business was initially not part of our strategy two years ago, but we found that in BPOs, churn rates are high, and the account onboarding process is often manual on both sides – banks and corporates— creating delays for all parties involved. As a result, employees' first payroll payments are often not available within the fortnight salary cycle practiced in the Philippines. So, we placed the kiosk on site at the BPOs, which supports both the corporate and the employee 24/7,” explained Clarke.

GoTyme’s stable deposit-everyday, payments-led business, allowed it to reduce gross interest payments from 5% to 4% by March 2024 without significant outflow. As of July 2024, the bank had a total deposit balance amounting to PHP17 billion ($320 million).

Clarke acknowledged that asset growth is still in its early stages and requires caution due to the country’s credit risk.

Average non-performing loans among digital banks issuing personal loans rose from 7.7% in May 2023 to 20.6% in May 2024, with past due ratios standing at 26.1%.  

“Our core focus to date has been on payments and everyday banking but that is quickly shifting towards credit. We will be going into pilot at the end of 2024 and will scale in mid-2025 with unsecured consumer credit products. Then, the next evolution will be offering investments,” said Clarke.

While the physical kiosk model has proven to be an effective channel for customer acquisition in the Philippines, scaling this model across the diverse and geographically dispersed archipelago presents logistical and operational hurdles. At the same time, balancing rapid growth with prudent risk management will be crucial for GoTyme to maintain a strong position in the market.

GoTyme’s focus on customer activation, not just sign-ups, is crucial. This approach ensures that customers can start transacting within minutes of account creation, effectively combining personal interaction with digital onboarding.

The bank’s physical distribution channel has similarities with those of other financial institutions worldwide but appears to be more carefully-crafted. Most of its counterparts overseas have faced difficulties to scale or turn their physical channel into a significant acquisition engine.

Revolut, for instance, is experimenting with instant card issuance in vending machines in airports or commuter zones, but this approach has not been implemented widely and is not in conjunction with a third party, unlike with GoTyme whose distribution channel is integrated with one of the Philippines’ largest retailers. The partnership gives GoTyme access to 54 malls and over 300 retail locations with 120 million visits recorded annually.

Westpac in Australia experimented with mini-branches within retail outlets in 2012 to offer basic banking services in areas without full-service branches. However, the initiative underperformed as customers raised concerns about privacy and the limited services provided in the mini-branches. Additionally, the anticipated cost savings were minimal due to staffing and operational costs. As a result, Westpac reduced the number of these mini-branches and shifted focus to enhancing digital channels and optimising its full-service branch network.

In 2014, Tesco Bank introduced in-store banking kiosks across its UK supermarket network, allowing customers to apply for credit cards, loans, and savings accounts while shopping. However, the initiative faced low customer interest, as most shoppers were focused on grocery shopping and were reluctant to handle financial matters in a busy retail space. Concerns over sharing personal financial information in such an environment also contributed to its limited success.

These cases illustrate that while the idea of bringing banking services closer to customers through kiosks or alternative physical channels is appealing, successful implementation requires careful consideration in understanding the target market, customer needs, cultural context, and operational feasibility.  

GoTyme's success with physical kiosks is partly due to tailoring its approach to the Philippine market where face-to-face interactions and immediate service, like instant card issuance, are highly valued. Card issuance in the Philippines still takes up to a week because of delivery via postal mail. By placing kiosks within the Gokongwei Group retail network, GoTyme leverages existing customer traffic and builds trust through association with a known brand.