The Bangko Sentral ng Pilipinas (BSP) is encouraging the country’s 405 rural banks to use technology and to digitalize most of its products and services to promote financial inclusion outside of the National Capital Region.
BSP Governor Benjamin E. Diokno said on Wednesday, Dec. 1, that rural banks and the 24 cooperative banks could potentially leapfrog financial inclusion efforts if they shift more to digital transactions. As of end-June this year, some 3,139 rural bank branches have served or released loans to micro, small and medium enterprises, agricultural, and other vulnerable sectors.
The BSP and the rural banking sector have provided access to the low-income and unbanked segments but Diokno said “filling in the gap in financial services to address the needs of the neglected segment” is just the gist of what these countryside banks can do. To accomplish more, they have to keep pace with technological developments, he said.
“We urge (rural banks) to make use of these technologies to expand your reach and maintain competitiveness in the New Economy,” said Diokno during a symposium hosted by the Rural Bankers Association of the Philippines (RBAP).
The BSP chief encouraged RBAP members to increase participation in the National Retail Payment System (NRPS).
The BSP has always intended the NRPS to be the venue for every Filipino to have easy access to financial services, as well as own accounts to make payments, and receive or transfer funds from any digital device.
Under the NRPS, fund transfer platforms PESONet and InstaPay payment rails were implemented.
However, Diokno said there are only 21 rural banks out of 405 supervised by the BSP that currently offer PESONet and and only 11 have InstaPay electronic fund transfer services.
Under BSP’s Digital Payments Transformation Roadmap, by 2023 they want 70 percent of Filipino adults to own a transaction account and at least 50 percent of payment transactions will be digital. By end-2020, 20.1 percent of all payments were already in e-payment form, and the COVID-19 pandemic was the crux for the rapid shift.
The BSP has expanded the digital payment rails to make online and mobile transactions more convenient via the QR Ph. The QR Ph Person-to-Person (P2P) was introduced in 2019 while the Person-to-Merchants (P2M) was launched last October. There are now 12 financial service providers and 20,000 merchants with P2M.