Since March 2020, our country has been experiencing widespread unemployment and underemployment. Rising inflation continues to be exacerbated by the COVID-19 pandemic in the Philippines, which has recorded the longest lockdown in the world. As our economy is bolstered by OFW remittances, the limited economic activity in other countries has also affected the livelihood of almost 10 million Filipinos working abroad.
Bangko Sentral ng Pilipinas Governor Benjamin Diokno pointed out that the average Filipino’s “apparent financial insecurity” today largely stems from the lack of financial literacy that in turn, hampers the ability to cope with the impact of the health crisis.
Due to limited human movement and health-related concerns, the adoption of digital banking and financial services has accelerated, particularly for money transfer services and digital wallets. But the general public is largely unaware of underlying challenges in terms of cybersecurity, data privacy, and potential financial repercussions in making use of these new platforms.
WorldRemit Ltd., a cross-border digital payments service headquartered in London, has seen a dramatic shift in the money transfer business from the traditional means of sending and receiving funds via physical locations to the digital remittance services.
Earl Melivo, WorldRemit country director for the Philippines, shared his insights on the impact of COVID-19 on the economy and said that 2020 was a testament to the resilience of OFWs. Despite the economic and physical challenges in their host countries, their total remittances to the Filipinos back home contracted by only 0.8% compared to the previous year.
An economist and former banker, Melivo believes that the government should have a multifaceted and holistic approach to increase financial literacy with the active support of the private sector. In his view, there is still a long way to go particularly for the unbanked and rural population of the country.
“Financial literacy should be deeply embedded very early on in our educational system from the secondary level all the way through to the university level. It’s important that financial literacy starts at a young age, including the importance of savings, wise use of credit, and the presence of both traditional and digital financial services in the country,” he emphasized.
Melivo thinks that innovations must continue – specifically the wider use of tech-based services like QR codes and apps – which should become relevant not only to the middle and upper classes but to the mass market as well.
Through strategic partnerships, WorldRemit provides OFWs the capacity to send money 24/7 and enable their recipients to get the funds instantaneously at lower remittance costs. According to Melivo, 90% of the transfers are made available in minutes through whatever means is most convenient to its customers such as mobile wallets, bank transfers, cash pick-up, or mobile top-up.
As more Filipinos become financially literate, digital service providers will experience rapid growth in transaction volumes involving customers who are empowered to send or receive money through multiple methods. It is therefore important to foster financial literacy within the Philippine educational system and in the home of every Filipino as a means of safeguarding the country’s financial security.
J. Albert Gamboa is a Life Member of the Financial Executives Institute of the Philippines (FINEX). He is the Editor-in-Chief of the quarterly FINEX Digest magazine and the monthly FINEX Focus newsletter. The opinion expressed herein does not necessarily reflect the views of these institutions and the Manila Bulletin.