Four Camarines Sur legislators have made a stronger push for the prompt congressional approval of a measure that would enable roughly 10 million to 34 million unbanked Filipinos to finally open their own bank accounts, in support of the Marcos administration’s complementary goals of accelerated digitalization and greater financial inclusion.

National Unity Party (NUP) president LRay Villafuerte said “the swift legislative approval of this measure would go a long way for the 19th Congress to help President Marcos achieve his lofty, complementary goals of bridging the country’s digital divide and attaining financial inclusion for all Filipinos.”

Villafuerte is one of the four authors of House Bill (HB) 273, or the “Bangko sa Baryo Act,”

The three co-authors are Camarines Sur Representatives Miguel Luis Villafuerte and Tsuyoshi Horibata; and Bicol Saro Rep. Nicolas Enciso VIII.

Villafuerte said the glaring “disconnect” in the use of digital financial service in the country is “borne out by the reality that despite the dramatic increase in online or e-payments, particularly in the last two years under the Covid-19 pandemic, an estimated low of almost 10 million to a high of over 34 million Filipinos have no bank accounts yet, apparently because of our leave-much-to-be-desired digital infrastructure coupled with the dearth of banks, especially in remote barrios across the country.”

“It is imperative for us legislators to address this digital disconnect by passing HB 273 in the House and a counterpart bill in the Senate to establish soon enough a banking presence all over the country,” said Villafuerte in support of President Marcos’ digital transformation and financial inclusion goals and of the Bangko Sentral ng Pilipinas (BSP)’s Digital Payments Transformation Roadmap (DPTR) and its National Strategy for Financial Inclusion (NSFI) target of onboarding at least 70 percent of adult Filipinos to the formal financial system by 2023.

For Villafuerte, pursuing financial inclusion and digitalization are complementary in nature, as the BSP said in its DGTB 2020-2023 targets that these two goals are “mutually reinforcing” and “go hand-in-hand, each enabling the other.”

A bank or transaction account is a basic indicator of financial inclusion and is the most basic tool for making digital transactions, according to the BSP.

HB 273 seeks to authorize the BSP to accredit cash agents with good reputation and credit history to set up shop in retail outlets such as convenience stores, pharmacies and other highly accessible places, and serve as “last mile’ providers of financial services in faraway places with zero bank presence.

“This proposed ‘Bangko sa Baryo Act’ endeavors to attain financial inclusion for the Filipino people and to establish robust financial consumer protection frameworks,” Villafuerte and his co-authors said in HB 273.

“It shall increase citizen’s financial literacy and capability so they can understand different financial services. It is hoped that, soon, an average barrio folk will be able to make sound financial decisions and put his or her hard-earned money to beneficial use.’’ they added.

In pursuit of digital empowerment, Villafuerte recalled that then-President Duterte issued Executive Order (EO) 170—“Adoption of Digital Payments for Government Disbursements and Collections”—last May 12 that directed all national government (NG) agencies, local government units (LGUs), state universities and colleges (SUCs) and government-owned or -controlled corporations (GOCCs) to tap digital platforms in disbursing and collecting official payments.

To implement EO 170, government agencies led by the Department of Finance (DOF) last week issued its draft Implementing Rules and Regulations (IRR) mandating all these covered government agencies to implement (1) digital disbursements in six months’ time, and (2) online collections within one to three years, depending on each agency’s operational readiness and capability to do so.

President Marcos, in his first State of the Nation Address (SONA) and his budget message to legislators for his proposed P5.268-trillion General Appropriations Act (GAA) for 2023, has stressed that digital migration and financial inclusion remain government priorities on his watch.

With digitalization a top priority of his administration, the President said in his first budget message last Aug. 22 to the Congress that his 2023 GAA plan includes a P12.1-billion investment in Information and Communications Technology (ICT) infrastructure and skills development “to accelerate our digital transformation.”

President Marcos said this proposed ICT outlay would fund, among others, the National Government Data Center Infrastructure and the National Government Portal “to digitally connect government agencies and enhance their accessibility to the public.

Earlier in his SONA, the President pitched for digital connectivity nationwide on his belief that “as the world moves into rapid digitalization, the digital divide will become more pronounced. The depth and breadth at which these technologies will be transformative in our lives is fully expected”.

Villafuerte said the establishment of a banking presence in all parts of the country is crucial to attaining a more inclusive economy, given the currently skewed usage of digital financial services in which a huge segment of our population is still financially excluded and underserved—as revealed in the BSP’s 2021 Financial Inclusion Survey (FIS)—because many Filipinos: (1) still have no bank accounts, and (2) refrain from making online financial transactions even if most of them have mobile phones and Internet access.

The World Bank (WB), in its Global Findex Database 2021 report, bared that some 9.23 million Filipino adults remain unbanked, and that millions of adults continue to receive government payments in cash only.

But the BSP has a much higher figure of financially excluded Filipinos, as its FIS 2021 bared there were still 34.3 million or 44 percent of an estimated 77.2 million Filipino adults who remain unbanked in 2021 (from 51.2 million in 2019), as the pandemic had accelerated the use of digital payments.

The least banked or most financially excluded sectors in 2021 were farmers and agricultural workers (73 percent), followed by workers in private households (48 percent) and self-employed individuals (45 percent), said the FIS.

The same FIS showed that 92 percent of Filipino adults had a mobile phone and 77 percent had access to the internet in 2021, and yet only 60 percent of them performed fund transfers, payments and other online financial transactions.

Most of these adults who performed online transactions belonged to the Class ABC segment and were mostly from Metro Manila, the FIS bared.

Villafuerte said the argument for establishing a banking presence—via HB 273—in communities without banks has been buttressed by the FIS 2021 results, showing that six out of 10 Filipinos have demonstrated a change in financial behavior amid the pandemic, as 37 percent of them have started to save more for emergencies and 17 percent increased their usage of digital banking and online payments.

The FIS showed that 52 percent of savers keep their money at home, said Villafuerte, possibly because there are no banks in their communities or it is difficult and costly for them to go to the nearest ones in neighboring barangays or towns.

He said that alongside making transactions with the government easier and cheaper, digitalization will make the country more investor-friendly as it would “further improve the ease of doing business (EODB), and (2) minimize official corruption by doing away with face-to-face interactions as well as the presence of ‘fixers’ in offices offering to expedite transactions for a fee.”

He said that providing unbanked Filipinos with access to useful and affordable financial products and services that meet their needs— transactions, payments, savings, credit and insurance—will be “a key enabler to reducing poverty and boosting prosperity. At present, a major obstacle towards financial inclusion is cost—especially those incurred by customers living in far-flung areas who have to consider transportation costs in reaching bank branches.”

HB 273 aims to address this problem, he said, by making the State create an enabling regulatory environment for innovations and allow banks to exponentially reach and serve clients more efficiently at the soonest possible time through authorized cash agents (ACAs).

Villafuerte said the “Bangko sa Baryo Act” can—and will—make this happen because in January 2017, the BSP’s Monetary Board (MB) already approved the guidelines for new bank service channels, “allowing banks, with prior BSP authorization to serve clients through cash agents contracted by banks to accept and disburse cash in its behalf, facilitating online self-service deposits, withdrawals and fund transfers, as well as bills payment.”

“HB 273 incorporates such BSP guidelines and further enhance the concept of banking through cash agents or ACAs. It shall provide various incentives to any person (applies to both natural and legal) who shall establish its business in the remote areas of the country such as waiver of government fees, free training for personnels, tax benefits, among others,’’ he pointed out.