INTRODUCTION

In today's dynamic and ever-evolving financial landscape, mobile wallets have

significantly transformed the way individuals conduct their financial transactions. These
digital wallets offer ease of use, enhanced accessibility, and robust security measures that
have reshaped client expectations and placed traditional banking methods to the test.

The rapid shift towards digital wallets has undeniably altered the financial
landscape. Traditional banking and financial institutions have been significantly
impacted, with the increased accessibility, security, and convenience offered by mobile
wallets raising the bar for client expectations (FM Contributors, 2023). It is in the face of
this transformation that teachers in Ballesteros, like many others, find themselves
navigating a new era of financial services.

However, despite the evident transformation in the financial landscape and the
increased adoption of mobile wallets, there exists a critical gap in understanding the
specific security dynamics and user perceptions among teachers in Ballesteros. Little
research has delved into the unique needs and concerns of this specific demographic,
leaving a void in our understanding of how they perceive and utilize the security systems
in mobile wallets compared to traditional banking. This research aims to bridge this gap
by focusing on teachers in Ballesteros and their interaction with modern financial
technologies.

To comprehend the correlation between mobile wallet security systems and

traditional banking security systems, one must appreciate the inherent differences and
shared objectives between these financial realms. According to the Economic Times
(2019), an e-wallet is defined as an electronic card or an app that consumers use when
conducting online transactions via mobile devices such as tablets, laptops, or
smartphones. The use of e-wallets allows for hassle-free sales transactions between
businesses and their customers, thus aiding in revenue generation (Kony, 2019).

Conversely, as per Anand and Mantrala (2019), traditional banks can be defined as
financial intermediaries with three distinct components: access to capital through
deposits, lending capabilities, and deposit collection, which represents the savings of
individuals and businesses. These banks can be further categorized into commercial/retail
banks and investment banks. Moreover, traditional banks typically require customers to
physically visit a branch for account access.

This quantitative research aims to delve into these questions and provide empirical
insights into the correlation between mobile wallets and traditional banking security
systems. By analyzing both the technical aspects of security and the perceptions of users,
this study seeks to offer a comprehensive assessment of the security landscape in the
context of modern financial technology. The research will employ a structured survey to
collect quantitative data from a diverse sample of mobile wallet users and traditional
banking customers. By quantifying various security parameters and gauging user
perceptions, the study aims to identify potential correlations, discrepancies, or areas
where mobile wallets and traditional banking differ or converge in terms of security.

The findings of this research have the potential to inform teachers in Ballesteros,
local financial institution banks and financial institutions operating in Ballesteros, local
government, educational institutions, researchers and academies, technology providers,
and the general public about the security dynamics within the evolving financial
ecosystem. Ultimately, this knowledge can contribute to the development of more secure
and trustworthy digital financial services, ensuring the continued growth and adoption of
mobile wallets while safeguarding the interests of consumers.

I. ON DEFINING MOBILE WALLETS

A literature review on the positive aspects of defining mobile wallets explores the
benefits and advantages associated with the clear and comprehensive definition of mobile
wallet technology. To begin, mobile wallets, as defined by Kelton (2023), are digital
repositories that securely store credit card or debit card information on mobile devices,
such as smartphones, tablets, or smartwatches. These wallets offer a convenient means of
making both online and in-store purchases, provided that the respective vendors accept
mobile payments. They are often considered more secure than physical payment cards
due to their advanced security technologies, as pointed out by Hicks (2023). In line with
this, as mentioned by Peeters (2020), mobile wallets are software applications designed
for mobile devices like smartphones, tablets, and smartwatches. These applications are
versatile, capable of storing financial information, as well as various personal data.
Functioning as an integral component of financial technology (Fintech), mobile wallets
enable customers to shop seamlessly via their smartphones. Notably, Opali et al. (2022)
highlight that mobile wallets offer a cashless and cost-efficient transaction method,
promoting traceability and enhancing sustainability in payment services. Over the past
decade, they have gained substantial attention from consumers and businesses alike. In
broader terms, the concept of a mobile wallet encompasses payment services regulated
within the financial industry, as Mohan and Sujith T S (2019) pointed out. Instead of
relying on traditional payment methods like cash, checks, or credit cards, consumers can
leverage mobile accounts, allowing them to make payments without the need for physical
cards or paper currency. Moreover, according to Duy, Thien, Van, and Nhat (2020),
electronic wallets serve as the digital counterparts to physical wallets. Users accustomed
to making cash payments can now transition to making online or offline transactions
using mobile wallet applications on devices like mobile phones or smartphones.
Customers fund their mobile wallets through debit cards or internet banking, enabling
them to conveniently pay utility bills, transfer money, and handle various financial
transactions. Hasan and Shukur (2021) emphasize that e-wallets represent a modern
electronic payment system designed for convenience and efficiency. They aim to replace
traditional wallets, which can inadvertently reveal personal information. E-wallets
function as personal secure folders containing the customer information needed for
mobile transactions. Furthermore, Kurnianingrum, Mulyani, and Alamsyah (2020)
elaborate on the concept of a digital wallet, which follows a payment-based business
model. These wallets empower consumers to engage in point-of-sale transactions for
goods and services using their smartphones. Digital wallets, also known as mobile
wallets, provide a secure alternative to card-based payments and are available through
popular apps like Apple Pay®, Samsung Pay®, and Google Pay®, as highlighted by
Harbison (2023).

Contrary to the positive aspects of mobile wallets, the negative literature sheds
light on certain drawbacks associated with such systems. As noted by Ibrahim, Kaur, and
Munjal (2020), users have expressed apprehensions regarding the usability, security,
direct money transfers, and the reluctance to store money in online wallets. These
concerns underline the fact that some individuals may find mobile wallets challenging to
use, have reservations about the security of their financial data, and anticipate potential
transaction inconveniences. Moreover, Li, Wong, Chau, Pan, and Koh (2020) shed light
on the security challenges faced by mobile wallets, such as vulnerabilities to man-in-the-
middle attacks, double-spending, and replay attacks. This highlights the need to explore
additional solutions, including the integration of blockchain technology, to fortify the
security of these payment methods. In this context, it's important to recognize the
potential risks associated with mobile wallets. Yakean (2020) points out that mobile
wallets can create opportunities for cybercriminals to infiltrate e-payment systems,
potentially gaining unauthorized access to or remotely shutting down e-Wallets or mobile
banking. Such vulnerabilities may expose users to financial risks and the compromise of
sensitive information. Furthermore, Vijayan et al. (2020) emphasize that digital payments
have not achieved widespread adoption when compared to traditional cash transactions.
This is primarily due to concerns related to security issues, threats, vulnerabilities, and
the general apprehension of individuals regarding the security aspects of digital payment
systems.

The synthesis of recent literature on defining mobile wallets is essential to

understanding the numerous advantages and drawbacks associated with this innovative
financial technology. On the positive side, mobile wallets represent digital repositories
securely storing payment information on mobile devices, allowing for convenient and
secure online and in-store transactions. They offer versatility, seamlessly integrating into
the world of financial technology (Fintech) and promoting cashless, cost-efficient, and
traceable transactions. Over the past decade, they have gained significant attention,
challenging traditional payment methods by replacing physical cards with digital
counterparts.

However, the negative aspects of mobile wallets must also be considered. Users
have expressed concerns about usability, security, and the reluctance to entrust their
money to online wallets. Security challenges, including vulnerabilities to various attacks,
underscore the need for enhanced protection, possibly through the integration of
blockchain technology. Mobile wallets, while offering convenience, can create
opportunities for cybercriminals to compromise financial security, making users
susceptible to potential risks and data breaches. Additionally, widespread adoption of
digital payments remains a challenge due to ongoing security concerns and the
apprehension of individuals regarding the safety of their financial information. Balancing
the advantages and disadvantages of mobile wallets is crucial for their continued
evolution in the realm of modern finance.
II. ON DEFINING TRADITIONAL BANKING

A review of literature on the positive aspects of defining traditional banks delves

into the essential role these institutions play in the financial landscape. It explores their
enduring significance, stability, trustworthiness, and their contributions to economic
growth and financial inclusion. To begin, Anand and Mantrala (2019), defined traditional
banks as the financial intermediaries with three distinct components: access to capital
through deposits, lending capabilities, and deposit collection, which represents the
savings of individuals and businesses. These banks can be further categorized into
commercial/retail banks and investment banks. According to Mafuru (2019), digital
technology has emerged as a transformative force in the banking sector, significantly
altering the industry landscape. Some institutions have fully embraced this transition,
while others are lagging behind, creating a clear division in the journey towards digital
transformation. Moreover, traditional banks traditionally require customers to physically
visit a branch for account access, whereas online banks operate solely through online
transactions, resulting in reduced fees and higher returns (Théaud, 2023). According to
Doing Business International (2022), it's worth noting that traditional banks have recently
expanded their virtual operations. Predictions suggest that banking will become entirely
digital within the next decade, making the prospect of opening a standard bank account in
2022 intriguing. Furthermore, traditional banks with their physical branches, regional
offices, own-brand ATMs, substantial workforces, and personalized customer service
delivered by dedicated account managers, existed for many years (Šarkauskaitė, 2023).
Similarly, in the study of Rusheed (2022), highlights the traditional banking system's
capacity to allow customers to open accounts, save money, withdraw funds through
various means, and seek assistance with loans. Furthermore, despite their long-
established presence during 400 years, traditional banks are facing challenges from newly
established financial technology companies, or fintech (Harasim¸2021). These institutions
have started forming partnerships with fintechs, and customers in the banking sector are
increasingly inclined to download fintech apps (World Bank Group, 2021). As
highlighted by Moran (2020), traditional banks should not view fintechs as threats but
rather as opportunities to protect their market share. Scholars and authorities suggest that
collaboration between the two can lead to innovative solutions for customers, with the
potential to capture more market share when the right strategies are implemented.
Additionally, it establishes a positive and significant relationship between the
internationalization of traditional banks and higher income earnings, linked to risk
(Ashfaq, 2021).

Contrary to the positive aspects of traditional banking, the negative literature sheds
light on certain drawbacks associated with such systems. Wells, McPherson, and Chavis
IV (2023), emphasize that traditional banks often pay significantly lower rates on
deposits, with an average savings account rate as low as 0.22 percent, which falls
substantially below national averages. Additionally, the requirement of minimum
deposits or balances for opening and maintaining checking accounts, as pointed out by
efcu (2023), can lead to higher account fees and limited accessibility. These fees can pose
a burden, particularly for individuals engaged in frequent transactions. Aspiring youth
(2023), further highlight the operational limitations of traditional banks, with their fixed
operating hours and slow service speed, making it challenging for busy individuals to
conduct their banking tasks efficiently. Furthermore, traditional banks may not be easily
accessible in rural areas, thereby hindering access to banking services for many residents.
Lastly, the risk of physical theft remains a concern for traditional banks, which store
physical money, making them potential targets for criminals.

The synthesis of recent literature on defining traditional banking offers a

multifaceted perspective. On the positive side, traditional banks play a pivotal role in the
financial landscape due to their enduring significance, stability, and contributions to
economic growth and financial inclusion. They are defined by their access to capital
through deposits, lending capabilities, and deposit collection, facilitating individual and
business savings. Traditional banks encompass both commercial/retail and investment
banks. However, the banking sector is undergoing a digital transformation, with some
banks fully embracing it, leading to a division in the journey towards digitalization.
Traditional banks have historically relied on physical branch visits, while online banks
primarily operate digitally, reducing fees and offering higher returns. Yet, traditional
banks are expanding their virtual operations, and predictions suggest that banking could
become entirely digital in the coming decade. Despite their long-standing presence,
traditional banks face challenges from emerging fintech companies. These fintechs are
changing the banking landscape by offering innovative solutions and mobile apps,
encouraging traditional banks to partner with them rather than view them as threats. This
collaboration can lead to innovative customer solutions and an expanded market share.

On the negative side, traditional banks often offer lower interest rates on deposits,
with minimal balances required, leading to higher fees and limited accessibility. The rigid
operating hours of traditional banks can hinder efficiency for busy individuals, and their
limited presence in rural areas can impede access to banking services. Additionally,
physical theft risk remains a concern for traditional banks due to their storage of physical
money.

III. SITUATION OF MOBILE WALLETS

In recent years, there has been a significant surge in academic research exploring
the positive evolution of mobile wallets, providing valuable insights into various facets of
this dynamic financial ecosystem. According to the GSMA Mobile Money State of the
Industry Report for 2022, the mobile money sector witnessed a substantial 31% year-on-
year surge in transaction volume, crossing the remarkable threshold of USD1 trillion in
2021. Simultaneously, the global count of registered mobile money accounts exhibited a
noteworthy 18.1% increase, reaching 1.35 billion, with person-to-person transactions
soaring to more than 1.5 million every hour (GSMA, 2022). This exponential growth is
set to persist, particularly in emerging markets like Africa, where conventional financial
services are challenging to access (Thunes, 2022). As of July 2022, the Bangko Sentral
ng Pilipinas includes six (6) digital banks in its official roster, namely Tonik, Maya,
UnionDigital, GoTyme, Overseas Filipino Bank, and UNObank, adding to the positive
outlook for mobile wallets. Digital banks are seen as innovative counterparts to
traditional banks and are key to promoting financial inclusion in the country. With
simplified sign-up processes compared to traditional banks, digital banks make payments
and banking more accessible, especially in areas without bank branches or ATMs. They
attract Filipinos by offering rewards such as higher interest rates for deposits and rebates
for payment transactions (Marco, 2022). Furthermore, Boku's 2021 Mobile Wallets
Report predicts that mobile wallets are on an upward trajectory, with over half of the
world's population expected to embrace them by 2025 (Thunes, 2022). Notably, the
adoption of e-wallets has also been significantly catalyzed by the COVID-19 pandemic,
as shown in a study by Ming and Jais (2022). This research identifies perceived
usefulness and social influence as key factors positively influencing attitudes towards e-
wallets, alongside perceived risk and government support stimulating their use during the
pandemic, consequently fostering the transition towards a cashless society in Malaysia. In
line with these insights, an e-wallet, as per Economic Times (2019), functions as an
electronic card or app, facilitating secure online transactions through mobile devices. It
effectively mirrors the functions of a traditional wallet while being linked to the user's
account for secure operation, streamlining sales transactions between businesses and
customers, contributing to revenue generation (Kony, 2019). E-wallets have become
integral in the shift towards digital transactions, particularly as e-commerce becomes
increasingly prominent. The rapid rise of electronic payments as a prerequisite for e-
commerce transactions is reshaping traditional cash-based systems, necessitating the
emergence of digital payment applications like e-wallets (Faten et al., 2021). Moreover, a
study examining mobile wallet usage in Vietnam underscores the positive relationships
among various determinants, necessitating adjustments in business strategies and security
policies by providers and governments to drive mobile wallet adoption, advancing
cashless societies and financial inclusion (Ly, Khuong, & Son, 2022). In the Malaysian
context, a SWOT analysis of e-wallets conducted by Alam, Awawdeh, and Muhamad
(2021) highlights strengths such as financial inclusion and simplicity, while
acknowledging weaknesses like infrastructure limitations and the threats posed by
potential reckless spending behavior among users. A broader global perspective, as
demonstrated by Marinova (2019), showcases the shift from traditional sales channels to
online platforms, fueling the need for electronic and mobile payment systems. Although
Bulgaria's adoption of such systems might be gradual, the trend towards cashless
payments is unmistakable on a global scale. Furthermore, Annikken (2023) emphasizes
the continuous evolution of payment technology, with mobile wallets gaining traction for
their convenience and flexibility, security, appeal to youth, and integration into the e-
commerce marketplace. As smartphone usage surges, mobile wallets are expected to
incorporate more features, including digital currencies and loyalty programs, further
solidifying their promising future (Statista Research Department, 2022). Notably, the
Philippines represents a success story in Southeast Asia, where mobile payment
transactions have seen sustained growth. The number of mobile wallet users in the
country surged to 24.6 million in 2020, with projections soaring to as high as 75.5 million
by 2025 (Statista Research Department, 2022). In this context, Reyes, Dural, Mangaoang,
Victor, and Borres (2021) have conducted a comparative study evaluating payment
options in the Philippines, highlighting the strengths of options like PayMaya, notably
excelling in security, contributing to the diverse preferences among consumers.

Contrary to the positive literature, there is a body of negative literature that

challenges the significance of the situation of mobile wallets in the realm of financial
technology. Subbiah (2022) highlights concerns revolving around the security of e-
wallets that have acted as a substantial barrier to their widespread adoption. These
concerns encompass issues such as apprehensions of credit and debit card fraud, missing
transactions, counterfeit websites masquerading as legitimate mobile wallet services, and
the potential exposure of sensitive banking details. The raised valid concerns extend to
worries about data breaches and the security of mobile phones during purchase
transactions. Expanding on these apprehensions, Marco's research in 2022 sheds light on
challenges faced by digital banks, particularly in countries like Singapore. Traditionally,
digital banks have been reliant on offering rewards and rebates to entice and retain
customers. However, some digital banks are compelled to reduce these perks to ensure
the sustainability of their operations, thereby prompting questions about the viability of
their business model. Additionally, it's essential to consider the Philippine context, where
issues pertaining to internet connectivity persist. Despite smartphone penetration
exceeding 100%, the country contends with sluggish and costly internet access, as
observed by Marco (2022). These constraints limit many Filipinos from fully reaping the
benefits of digital payment and banking services, thereby contributing to the negative
discourse surrounding mobile wallets. Wong's research (2019) delves into the acceptance
of mobile payments among Hong Kong citizens, revealing a scenario where mobile
payments, while generally accepted, have not yet achieved widespread integration into
daily life. Factors like the perceived security and usefulness of mobile payments play a
significant role in shaping the intent to use such services. The hesitancy towards broader
adoption is fueled by real-life security incidents, underscoring the imperative need to
enhance mobile payment security (Wong, 2019). Furthermore, Baghla's study conducted
in 2019, titled "A Study on the Future of Digital Payments in India," recognizes the
positive momentum towards a cashless economy. However, the study emphasizes the
need to address two pivotal challenges: the lack of awareness among the population and
concerns regarding the security and the risk of hacking associated with digital payment
methods (Baghla, 2019).
 The synthesis of recent literature on the situation of mobile wallets reflects a
dynamic landscape with both positive and negative aspects. On the positive side, mobile
wallets have experienced significant growth, with rising transaction volumes, global
adoption, and forecasts of widespread use in the near future. They have played a crucial
role during the COVID-19 pandemic, contributing to the transition to cashless societies
and offering convenience, security, and flexibility. Additionally, mobile wallets are
expected to become more versatile, incorporating digital currencies and loyalty programs.
The success of mobile wallets in countries like the Philippines underscores their
strengths, particularly in terms of security.

However, on the negative side, security concerns have acted as a substantial

barrier to widespread adoption, encompassing issues such as apprehensions of credit and
debit card fraud, missing transactions, and the potential exposure of sensitive banking
details. In some cases, digital banks have had to reduce rewards and perks, raising
questions about their business model's viability. Internet connectivity issues, particularly
in countries like the Philippines, hinder many from fully benefiting from digital payment
services. While mobile payments are generally accepted, they have not achieved
widespread integration into daily life in some regions, with concerns about security and
usefulness playing a significant role in adoption. Addressing challenges like awareness
and security concerns is essential for the continued momentum towards a cashless
economy.

IV. THE SITUATION OF TRADITIONAL BANK

In recent years, there has been a significant surge in academic research

highlighting the positive situation of traditional banks, offering valuable insights into
various facets of this enduring financial ecosystem. According to the findings of a study
conducted by Tse, Esposito, and Goh (2022), it was observed that the wheel of fortune is
turning in favor of traditional banks. Firstly, interest rates are expected to rise
continuously, which is likely to enhance the profitability of banks. Consequently, this
will enable them to expand their lending businesses and build a strong defense against
fintech companies. In contrast, many fintechs have resorted to offering a wide range of
expensive products, such as access to airport lounges, cryptocurrency and stock trading,
and substantial referral fees, to sustain their growth. Simultaneously, the funding for
fintech companies is becoming scarcer, with investors placing less emphasis on revenues
and instead seeking a pathway to profitability. In contrast, traditional banks boast large
customer bases, which makes it more cost-effective for them to cross-sell and transition
customers to digital banking platforms. Additionally, high interest rates and inflation are
anticipated to impact challenger banks that rely on transaction fees, while incumbent
banks are likely to generate more revenue per customer. In the context of these
developments, Marco (2023) highlights a different approach taken by BDO. Rather than
going fully digital, BDO advocates a "phygital" approach to banking. The bank is
establishing new branches and upgrading existing ones to cater to the demand for
physical banking. BDO is committed to combining digital and physical banking by
digitizing its branches, including Know-Your-Client (KYC) processes, and enhancing its
ATMs to accept checks and passbooks alongside traditional ATM cards. This strategy
aligns with the enduring appeal of physical banking to Filipino customers, who associate
traditional banks with stability, reliability, and security. While digital banks may innovate
at a faster pace, traditional banks still hold an advantage as digital banks work on making
their business models more sustainable. Marco argues that the perspective should not pit
digital against traditional banks but should encourage collaboration between the two to
promote financial inclusion. Furthermore, the Banking Sector Outlook Survey (BSOS)
for the First Semester of 2021 revealed that the Philippine banking sector (PBS)
anticipates stable prospects. Banks are optimistic about achieving double-digit growth in
assets, loans, investments, deposits, and net income in the next two years (2022 to 2023).
Most respondent banks expect their Non-Performing Loan (NPL) ratio to exceed 5
percent, while a greater number of banks intend to report higher NPL coverage ratios
ranging from 50.0 percent to 100.0 percent. The PBS also aims to maintain capital and
liquidity buffers at levels exceeding both domestic and global standards.

Contrary to the positive literature, there is a body of negative literature that

challenges the significance of the situation of traditional banks. The landscape of the
finance industry has evolved significantly over the past decade, as highlighted by Tse,
Esposito, and Goh (2022). Fintech companies have dominated the scene, with traditional
banks often perceived as outdated and struggling to find their place in the ever-evolving
tech-driven economy. The emergence of startup banks, benefiting from low-interest rates,
has allowed them to offer cost-effective and customer-centric services, steadily gaining
market share. Unfortunately, traditional banks, hampered by legacy IT infrastructure,
have faced challenges in keeping up with their technology-driven counterparts. Despite
their efforts to modernize and expand IT capabilities, their decades-old systems have
hindered their competitiveness in terms of personalization, customer experience, and
innovation, leading some to explore the creation of new challenger banks as alternative
strategies. In parallel, Labrou (2022) points out that non-performing loans (NPLs) in the
Philippines reached a 13-year high at 4.51% during the peak of the pandemic in 2020.
However, there has been a positive shift, with the NPL ratio of Philippine banks
decreasing to an eight-month low of 4.35% in November 2021. This improvement comes
after a challenging period, where bad debts increased by 19.1% from January to
November 2020, driven by the economic impact of the pandemic. The industry's asset
quality deteriorated as NPLs and past-due loans piled up. The allowance for credit losses
increased by 19% to 19.86 billion pesos to address rising defaults. Nevertheless, the
situation has since improved. S&P Global (2023) sheds light on the financial inclusion
scenario in the Philippines. Despite being part of Southeast Asia, the country has one of
the lowest banking penetration rates. Approximately 51.2 million Filipino adults
remained unbanked out of a total adult population of 72 million in 2019, according to the
BSP's 2019 Financial Inclusion Survey. Notably, the pandemic spurred financial
inclusion, with an increase in Filipinos opening digital accounts to receive government
cash assistance. In fact, about 4 million new accounts were opened digitally in a short
period during the government's pandemic relief program, as reported by BSP Governor
Benjamin Diokno in December 2020. As of 2021, Marco (2023) emphasizes that 53% of
Filipinos still remain unbanked, underscoring the ongoing need for both digital and
traditional banking services in the Philippines. Moving on to the concept of green
banking, as explored by Qureshi and Hussain (2020), the study suggests that challenges
such as the lack of skills, knowledge, target market identification, and persuasion hinder
the formulation and implementation of green banking products. While green banking
offers opportunities for Islamic banks to align with Maqasid-e-Shariah, it may also limit
their financing options. Policymakers should take prompt action to address this situation.
The banking industry faces a critical turning point as highlighted by a study conducted by
IDC and Backbase. More than 60% of surveyed individuals in the Asia-Pacific region,
including the Philippines, express a willingness to switch to digital banks. This puts
traditional banks in a challenging position, urging them to innovate and offer creative
solutions to compete effectively and retain and attract customers. Lastly, Burtnyak and
Malytska (2021) analyze the development of the banking sector in Ukraine and anticipate
a gradual slowdown in its growth due to changing global financial market conditions and
market saturation. This observation underscores the need for the industry to adapt to
evolving dynamics.

The synthesis of recent literature on the situation of traditional banks reflects a

dynamic landscape with both positive and negative aspects. On the positive side, some
studies emphasize the positive outlook for these banks. Rising interest rates are expected
to boost profitability and lending capacity, providing a robust defense against fintech
competitors. The large customer bases of traditional banks allow for cost-effective cross-
selling and a transition to digital platforms. Additionally, the "phygital" approach adopted
by BDO in the Philippines underscores the enduring appeal of physical banking,
particularly in terms of stability and security. Collaboration between traditional and
digital banks is promoted for the sake of financial inclusion.

Conversely, negative literature suggests that traditional banks are grappling with
challenges in an increasingly tech-driven economy. Fintech companies and startup banks,
benefiting from low-interest rates, are gaining market share by offering customer-centric
services. In contrast, traditional banks, hindered by legacy IT infrastructure, are
struggling to keep pace. There have been past issues with non-performing loans, although
some improvement has been observed. The Philippines also faces the challenge of low
banking penetration rates, with a substantial portion of the population remaining
unbanked. Additionally, the concept of green banking presents both opportunities and
limitations for traditional banks, calling for attention from policymakers. In the Asia-
Pacific region, there is a notable willingness among individuals to switch to digital banks,
which is pressuring traditional banks to innovate and compete effectively. Finally, the
Ukrainian banking sector anticipates a gradual slowdown in growth due to changing
market conditions and saturation, highlighting the need for adaptation.

V. THE IMPACT OF MOBILE BANKING TO TRADITIONAL BANKING

In recent years, there has been a growing body of research examining the impact
of mobile banking on traditional banks, unveiling various dimensions of this evolving
financial landscape. To begin Chiuan Chiuan Su, Wei Wu, and Chi Yen (2021)
highlighted the positive transfer of customer trust and loyalty from physical to mobile
banking environments. They emphasized the significant impact of corporate reputation
and structural assurance on trust in both physical and mobile settings, with structural
assurance playing a crucial role in mobile payment. The study offered valuable
theoretical and practical implications. Frackiewicz (2023) underscored the profound
impact of mobile payment systems on traditional banking. These systems enhanced
accessibility, removed geographical and time barriers, and led to a reduction in physical
branches. In response, traditional banks had to innovate and create online-only banks, or
neobanks, to stay competitive. According to Jetir organization (2022), digital banking
brought increased convenience, cost reduction, and competition, along with new security
concerns and evolving customer expectations. This digital transformation allowed banks
to personalize services and access new markets, but traditional banks had to undergo their
digital transformation to remain competitive. Eqibank (2023) pointed out that digital
banks, without physical branches, forced traditional banks to invest in digital
technologies. They introduced online and mobile banking platforms, new payment
methods, and advanced security measures to compete. However, traditional banks faced
challenges in upgrading technology and providing the same level of convenience and
accessibility as digital banks. TS2 Shop (2023) discussed the shift towards digital
payment systems, driven by convenience, speed, and enhanced security. Digital payment
systems have streamlined transactions and reduced the risk of fraud and identity theft,
making them a preferred choice. According to the study of kimondo (2022), study found
that mobile wallets affected banks services efficiency and effectiveness and therefore
recommends that commercial banks should incorporate the money wallets for their
customers to use in the transferring of funds between their mobile phone accounts and
their respective bank accounts for easy accessibility and convenience. The study further
recommended that government should encourage the incorporation of the mobile money
accounts and transferability and also encourage innovation in the fields of mobile money
so as the country could be in the league of the developed countries.

Contrary to the positive literature, there is a body of negative literature that

challenges the significance of the impact of mobile banking on traditional banks. Some of
these contrasting perspectives merit consideration. The rise of mobile payment systems
has posed a significant challenge to traditional banks as they risk becoming irrelevant in
the evolving financial landscape (Frackiwicz, 2023). This threat is further underlined by a
survey conducted by Mayer & Brown (2021), which shows that 85% of respondents
consider Fintech firms as a substantial threat to traditional banking. Fintech companies'
agility in responding to customer preferences and introducing innovative products has
placed them in direct competition with traditional banks, reshaping the industry. To stay
competitive and cater to evolving customer needs, the banking system in India has
emphasized the need for automated banking and internet banking, offering convenience
while cutting expenses (Moran, 2020). However, as highlighted by Gohil, Pravinbhai,
and Ruiwale (2023), different demographics, including older individuals, have varying
levels of acceptance of electronic banking services, necessitating tailored training and
strategies for different age groups. Security concerns remain a central issue, prompting
the importance of educating customers on safe practices. Furthermore, FM Contributors
(2023) assert that digital wallets have transformed the way people manage their finances
and do business, challenging traditional banks to enhance their digital capabilities and
provide personalized experiences. In response to the changing landscape, traditional
banking institutions are incorporating advanced security features into digital wallets,
including encryption, biometric authentication, and tokenization, which are crucial for
building trust and encouraging user adoption. This shift is not limited to local contexts; as
seen in the research by Lembaga Penelitian dan Pengabdian Masyarakat Universitas
Jambi (2021), the rapid growth of fintech in Indonesia has disrupted state-owned Islamic
banks, emphasizing the need for adaptability and innovation to maintain competitiveness.
The study suggests that collaboration between fintech and traditional banks, despite
challenges such as data security, legal aspects, and human error, can be a way forward,
creating new income opportunities and enhancing efficiency (Lembaga Penelitian dan
Pengabdian Masyarakat Universitas Jambi, 2021). This interconnected transformation in
the banking sector signifies a dynamic shift that traditional banks must navigate to remain
relevant and customer-centric.

The synthesis of recent literature on the impact of mobile wallets on traditional

banks is a double-edged sword, with both positive and negative consequences. On the
positive side, research has shown that mobile banking can transfer customer trust and
loyalty from physical to digital banks, emphasizing the role of corporate reputation and
structural assurance. This shift has brought convenience, cost reduction, and make them
more competitive in today's evolving financial landscape. Digital transformation has
allowed banks to personalize services and access new markets, driving innovation.
Mobile wallets have streamlined transactions, reducing fraud risks and enhancing
security. They offer accessibility and convenience for fund transfers between mobile and
bank accounts, aligning with evolving customer expectations.

However, this digital transformation also poses challenges and risks to traditional
banks. The rise of mobile payment systems threatens to make traditional banks irrelevant,
with Fintech firms considered substantial threats. Fintech companies' agility and
innovation have reshaped the industry, forcing banks to adapt rapidly. Different
demographics, including older individuals, have varying levels of acceptance of
electronic banking services, necessitating tailored strategies and education. Security
concerns persist, prompting banks to incorporate advanced security features into digital
wallets, crucial for building trust. This shift towards digital has disrupted traditional
banking in various regions, emphasizing the need for adaptability and innovation.
Collaboration between fintech and traditional banks, while promising, comes with
challenges such as data security and legal aspects.

THE SYNTHESIS OF THE STUDY

The following synthesis provides a comprehensive perspective on the intricate

relationship between mobile wallets and traditional banking. It encompasses a thorough
examination of their definitions, current situations, and the transformative influence of
mobile banking on the traditional banking model. Within this synthesis, we delve into the
various dimensions of these financial domains, shedding light on their strengths,
obstacles, and the evolving dynamics that define the financial landscape.
 Mobile wallets have emerged as digital repositories, securely housing payment
information on mobile devices, offering convenience and secure transactions. They
seamlessly integrate into the world of financial technology, promoting cashless, cost-
efficient, and traceable transactions. However, they grapple with security concerns and
the reluctance of users to entrust their money to online wallets. Enhanced protection,
potentially through blockchain technology, is needed to address these vulnerabilities.

Traditional banking, on the other hand, boasts enduring significance, stability, and
contributions to economic growth. It has played a pivotal role in financial inclusion
through access to capital and lending capabilities. Nevertheless, it faces challenges from
fintech companies and a digital transformation that has led to a division in the journey
towards digitalization. Traditional banks, historically reliant on physical branches, are
now expanding their virtual operations. Collaboration between traditional and digital
banks offers the potential for innovative customer solutions.

The situation of mobile wallets is marked by significant growth and global

adoption. They have played a crucial role in the transition to cashless societies,
particularly during the COVID-19 pandemic. However, security concerns and issues
surrounding awareness and usefulness hinder their widespread integration into daily life
in some regions.

In the traditional banking sector, studies offer a mixed outlook. Rising interest
rates are expected to boost profitability, but fintech competitors are gaining market share
with customer-centric services. Challenges in an increasingly tech-driven economy
include legacy IT infrastructure, non-performing loans, and low banking penetration
rates.

The impact of mobile banking on traditional banks is a double-edged sword.

Mobile banking has the potential to transfer customer trust and loyalty from physical to
digital banks, offering convenience and innovation. Still, it threatens to make traditional
banks irrelevant and has forced them to adapt rapidly. Collaboration between fintech and
traditional banks holds promise but comes with challenges like data security and legal
aspects.

In conclusion, the financial landscape is evolving, with mobile wallets and

traditional banks facing their respective opportunities and challenges. The future lies in
finding the right balance between these two financial powerhouses, embracing
innovation, and addressing security concerns to cater to the diverse needs of consumers in
an ever-changing world of finance.