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Bangko Sentral ng Pilipinas to implement digital finance ecosystem to address Filipino issues on financial inclusion

An estimated 15.8 million Filipino adults own an account according to the 2017 Financial Inclusion Survey (FIS) conducted by the Bangko Sentral ng Pilipinas (BSP). The number represents ¼ of the total adult population in the country, which is defined as individuals aged 15 and above.

According to the announcement released by the BSP, the FIS is a nationally representative survey dedicated to collect financial inclusion data from the perspective of Filipino adults. It is the second run of the national survey with the baseline conducted in 2015. A basic indicator of financial inclusion is ownership of an account that can be used to save money, receive salary, send or receive remittance, and pay bills.

Banks continue to have a higher share (11.5%) in account penetration than non-banks such as microfinance non-government organizations (8.1%), cooperatives (2.9%), and non-stock savings and loan associations (0.3%). Only 1.3% of adults have an electronic money (e-money) account.

Out of the 52.8 million adults who do not have an account, 60% cited not having enough money as the main reason. 21% reasoned lack of need while 18% was due to absence of documentary requirements. Other reasons mentioned are high cost (10%), lack of knowledge in account opening (9%), lack of work (8%), and lack of awareness (8%).

Information concerning women’s financial inclusion was also gathered from the survey. It said that women’s financial inclusion is positively demonstrated across different financial products and services. Although bank and e-money account penetration is slightly higher for men, women are twice likely to have an account than men in general.

Institutions such as microfinance NGOs and cooperatives drive the gender gap that favoured women. The Philippines presents an interesting case wherein the level of financial inclusion is significantly higher among women than men, compared to most developing countries that face the persistent challenge of financial exclusion for women.

There are opportunities for greater financial inclusion enabled by digital technology. According to data, accounts remain underutilised for payment and remittance transactions. Among account owners, only 18% are receiving salary, 12% are sending/receiving money, and 6% are receiving pension. Nearly 9 out of 10 adults have payment transactions, where 60% are still paying in cash.

Remittance transactions are done over the counter as 93% used remittance agents in sending money while 83% used them for receiving money in the past six months. Digitising these payment and remittance transactions is a crucial step towards digital financial inclusion.

The survey showed ways to improve existing services as well as the issues that need to be tackled in order to increase the adoption of electronic payments. 70% of the adults cited convenience as the top consideration for choosing a channel for payment and remittance. Most senders and recipients of money mentioned cheaper charges, more physical access points, and faster services as the best ways to improve fund transfer services.

Among the issues that need to be addressed for automated teller machines (ATM) are concerns on availability, trust, and distance. For electronic platforms such as internet and mobile banking, the issues are lack of awareness and lack of connectivity. Around 46% of account holders who have access to the internet are ambivalent about e-payments due to issues such as hacking, personal security breaches, and unsafe access.

The National Retail Payment System (NRSP) is the response of BSP to the aforementioned issues. It is BSP’s flagship program for digital finance that supports the diverse needs of all users in a manner that is secure, sustainable, convenient, and affordable.  

Moreover, the BSP has also issued regulations to democratise access to an account through the basic deposit account. BSP will also create an expansive network of low-cost touch points through branch-lite units and cash agents, together with other key policy issuances and initiatives to promote digital finance.

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