BSP sees big strides in fin’l inclusion

By Lee C. Chipongian

The Bangko Sentral ng Pilipinas (BSP), known globally as a leader in financial inclusion (FI) initiatives and programs, said it expects to achieve more in terms of advancing FI in the country through digitalization.

MB file photo. MB file photo.

The BSP recently released its 2018 “Year-End Report on BSP’s Financial Inclusion Initiatives” where it highlighted the National Strategy for Financial Inclusion (NSFI) efforts in facilitating "key multi-partite agreements such as the promotion of financial literacy in schools and access to finance by micro, small, and medium enterprises (MSMEs).”

In support of NSFI, the central bank has worked on and supported such laws as Philippine Identification System Act or Republic Act No. 11055, and the Personal Property Security Act or RA No. 11057.

Earlier last year, it released the 2017 “State of Financial Inclusion in the Philippines” which discussed milestones and trends in financial inclusion in the country.

In the report, it said unbanked local government units (LGUs) declined to 554 or 33.9 percent of the total in 2017 from 582 or 35.6 percent in 2016, or about a 1.7 percentage points decrease in unbanked areas.

As of June 2018, the BSP said 155 banks – out of 581 head offices – have tapped 1,751 branch-lite units to expand physical outreach in 738 LGUs, of which 151 LGUs were being served by branch-lite alone.

The BSP has started listing all non-regular bank branches as branch lites in 2018. This means that banks’ extension offices, microbanking offices and other banking offices are now referred to as branch lite units. The difference between regular branches and branch lites is that the latter have limited banking activities but could provide a wide range of products and services suited for servicing the needs of the market except for sophisticated clients with aggressive risk tolerance.

Based on the 2018 FI report, about 66.3 percent of all municipalities now have banking presence, with 93.2 percent of all municipalities having at least one financial services access point. These figures have been steadily growing as banks set up more low-cost access points, said the BSP.

“Almost half (47.9 percent) of Filipino adults have savings, but 71.3 percent of savers still keep their savings through informal means,” the report said.

As of June of last year, there are 15.8 million Filipino adults have formal banking accounts, accounting for 22.6 percent of adult population.

The report said the potential for digital payments growth is huge since only 18 percent of account holders use their account for payments. About seven adult Filipinos out of 10 while not owning accounts, do have mobile phones that can be used for digital payments.

Of those adult Filipinos that do make payments, majority or 60 percent still pay in cash.

According to the central bank, the two reports on FI effectively “mark and measure” significant strides in expanding FI. “Building on the gains, the BSP has identified as key priority areas for this year the continued promotion of digitalization to expand access and usage of financial services, as well as strategic partnerships anchored on the NSFI to fully develop the financing ecosystem for agriculture and MSME financing,” it said.

In a statement, the BSP said it remains “optimistic that significant improvements in financial inclusion will be achieved in light of recent regulations that are expected to boost account ownership and acceptance of digital payments.”

The BSP lists improvements in the NRPS such as in the implementation of the basic deposit account framework early last year, which “meets the need of the unbanked for a low-cost, no-frills deposit account which they can open even without standard identification documents.”

The establishment of branch-lites is another significant regulation since as the BSP explained, it “gives banks the flexibility to determine the appropriate size and model of a banking office for a specific area or locality based on market needs.”