Rural banks in the Philippines will soon join other bigger commercial banks in providing digital and contactless transactions to poorer communities or rural areas across the country, especially under the coronavirus pandemic.

Thanks to the French Development Agency (AFD) for providing the Rural Bankers Association of the Philippines (RBAP) with an €800,000 (around P47.9 million) grant facility aimed to support the digital transformation of inclusive financial institutions, starting with rural banks.

In a statement released Friday, the Embassy of France in the Philippines cited the significant roles played by rural banks in promoting inclusivity in markets underserved by traditional commercial banks. To remain competitive, it said rural banks must modernize and adapt from manual to digitized processes to increase efficiency, reduce costs, and better serve their markets.

AFD Country Director in the Philippines Laurent Klein said he is pleased with the partnership they signed last July 9 with the RBAP noting that rural banks remain in a unique position to extend the reach of financial services in rural areas due to its wide range of diversity in size and activity levels.

“In line with our organization’s strategic objectives to support financial systems and fight social and economic inequalities, this technical assistance will contribute to promoting access to quality digital financial services for all, including the most vulnerable part of the population,” Klein said.

The grant will finance technical assistance such as training, capacity building, and communication and awareness-raising activities to support the digital transition of core-banking systems to the cloud, with a view to further develop the financial inclusion of underserved and unbanked populations in the country.

French Ambassador Michèle Boccoz to the Philippines said the signing of the grant is a “milestone” in the bilateral relationship between the two countries, adding that France is proud to support the Philippine government’s strategic reforms in digital transformation and could pave the way to resilience and recovery especially of disadvantaged Filipinos in the rural areas.

“This is a further milestone in the bilateral relationship between our two countries. The Covid-19 pandemic is disrupting our societies and leads us to consider radical shifts in our usual modes of economic and social interactions,” Boccoz said.

RBAP President Elizabeth Carlos-Timbol thanked the AFD for supporting their organization’s goal to help rural banks especially the small ones to digitize and capacitate as they look forward to working with the French financial institution to create capacity-building programs tailor-fitted to the needs of Philippine rural banks.

The AFD, alongside the ADB, has been supporting the Inclusive Finance Development Program (IFDP) since 2019 through a €100 million sovereign loan of the French agency to the Philippine government.