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The financial space has come a long way in the Philippines as banks, wallet services, consumer lending, and insurance are all going digital, albeit at different paces.
The same goes for the remittance space, largely important in the country due to the large overseas Filipinos worker (OFW) population.
“More and more senders and recipients would like to send and receive their money digitally. Case in point would be the acceleration of digital wallets being the primary mode of receiving remittances,” said Earl Allan E. Melivo, country director of cross-border digital payments service WorldRemit.
In this B-Side episode, Mr. Melivo shares with BusinessWorld reporter Brontë H. Lacsamana how financial inclusion can be achieved by supporting digital services in the Philippines.
We must welcome public, private, domestic, and international players.
With the Bangko Sentral ng Pilipinas (BSP) regulating the financial space in support of technological innovations and the operation of multiple domestic and international players that offer beneficial services, digital channels will definitely improve.
“With all these combined efforts and obviously support from both the private sector and the government, we are seeing a lot of improvements and also helping the government to reach its goal of higher financial inclusion or more than 50% financial inclusion in the next five years,” said Mr. Melivo.
He added that the exponential growth of e-commerce, banks improving their digital banking channels, and people signing up for digital wallets and availing of financial services online, has shown how the Philippines is ahead of the curve.
Cash is still king, but digital payout methods are gaining traction.
However, cash is still the number one means of sending and receiving remittances. Companies like WorldRemit, despite acknowledging this fact, also remain hopeful for the increase of digital payout methods which they facilitate cross-border.
“You can see that the market is shifting towards digital receive methods, as I said, due to the emergence of digital banks and also mobile wallets,” Mr. Melivo said, “So we’re already seeing that as evidence of the industry evolving into a more efficient industry.”
He predicts that, in the next three to five years, more remittances will be received via digital channels. The shift can happen very fast, as many companies experienced — WorldRemit, for instance, launched a send-to-mobile wallet service just a month after the Philippines went into lockdown.
The biggest challenge in the Philippines is internet penetration.
Improving internet quality and access will be a fundamental part of achieving financial inclusion, especially in a large country with thousands of islands.
“The government’s drive to do financial inclusion is there, and the industry players are very much supportive and doing their best to increase financial inclusion in the country. However, there’s still a question of when we can provide the best possible internet technology to pave way even for the remote areas,” Mr. Melivo explained.
Mobile internet, in particular, will be vital in letting as many Filipinos as possible avail of digital services rather than rely mostly on cash remittances.
Government needs to embrace digital culture and help educate the public.
In the Philippines, there’s a need to educate the wider audience of financial services available in the market. This includes what they are, where to get them, the benefits, and the threats in the digital financial space.
“Just like the traditional or offline methods, it’s susceptible to abuse, obviously hackers being wiser these days, so it’s a question of how can we further improve these services and also how we can actually try to protect consumers and educate them of the availability of these services and the full benefits of which,” said Mr. Melivo.
Though the private sector and the government’s financial sector are well underway in terms of financial technology, other public agencies need to embrace it as well.
Only then will financial inclusion be attainable, he added.
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