Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said the production of the single identification card or the National ID which is both a digital and physical ID is on track and that there is no budget concerns that might be delaying its implementation.

“The Philsys (Philippine Identification System) project implementation is on track. The Philippine Statistical Authority (PSA) is targeting to register on the fourth quarter this year some five million low income households,” said Diokno.

He also made it clear that with regards to financing and budgeting the Philsys – “there should be no concern about the budget,” the BSP chief, formerly the secretary of the Department of Budget and Management, said.

The BSP, before the pandemic, was prepared to produce all 116 million national ID card at P30 each, for a total cost of P3.4 billion. The BSP will initially shoulder this printing cost.

President Duterte and a lot of public and private sector players have expressed frustrations over the slow implementation of the two-year old Philsys especially since the pandemic made it more crucial for Filipinos to have a reliable and secure national ID. The lack of account ownership and access to digital payments became front and center when the government thru the Department of Social Welfare and Development started its digital distribution of the Social Amelioration Program.

Diokno has pointed to two game changers in the digitalization of financial services and expansion of e-payments -- access to affordable and fast internet connection and the digital ID under the Philsys.

 “The lack of ID is one of the top reasons (most Filipinos are) not able to open an account and this is cited by a quarter of the unbanked based on the financial inclusion survey,” said Diokno. “Philsys will address this by providing all Filipinos an acceptable ID that can be used on its own to open an account. More importantly, Philsys is not just a traditional card-based ID but a digital ID, one that can be used reliably for seamless, remote onboarding.”

Diokno also said that with Philsys’ “Know Your Customer” or KYC method,    “identity proofing can be done digitally by banks without needing to manually verify and store physical electronic copies of submitted card-based IDs. This will make onboarding and client acquisition significantly cheaper, making it viable for banks to go after the mass, low income market.”

  Based on the 2019 BSP Financial Inclusion Survey (FIS), six in 10 adults in urban areas have smartphones and are internet users compared to four in 10 in rural areas, while seven in 10 adults in Metro Manila have a smartphone and internet. The BSP said rural areas, regions outside Metro Manila, and “those who belong to lower socio-economic class are clearly at a disadvantage (and) addressing the digital divide needs to be part of (BSP’s) broader inclusion efforts.”

There are 51.2 million unbanked adult Filipinos, out of 72 million in 2019, and lack of enough money is why they have no account, as well as perceived lack of need for an account and lack of documentary requirements such as an ID.

But the pre-COVID-19 FIS also indicated that there are now more Filipino adults who own an account compared 2017, which increased to 29 percent from 23 percent, and these numbers do not include the digital account expansion during the pandemic. The BSP said the six-percentage point increase in account penetration is equivalent to five million Filipinos opening an account between 2017 and 2019.

Diokno said he remains confident that they will achieve their financial inclusion target which is to have 70 percent of the adult population with accounts by 2023, and this is “amid the rise in account ownership, the increase in e-payments during the pandemic, and the expected rollout of the national ID system.”

“This target is ambitious but doable,” said Diokno.

According to the Philsys website, the Philsys Registry Office – adjusted for the safety requirements due to the pandemic – is already completing procurement process. In July, the target was to put up a data privacy management program and for the month of August, to have a more aggressive information campaign in preparation for the fourth quarter registration.

Last year, the BSP and PSA signed a memorandum of agreement for a government-to-government deal. The PSA will handle the personalization of the IDs or the database and to ensure the “availability, confidentiality, integrity, accuracy and readiness” of the data while the BSP will produce the physical IDs.

The plan was that BSP and PSA will release about 14 to 15 million of national IDs this year but the pandemic has delayed this schedule.