Digital banks expected to boost PHL credit information system
CREDIT Information Corp. (CIC) urged digital lenders to join the public credit registry to boost the database and help give unbanked Filipinos access to lending.
“The registration of digital banks as submitting entities is a valuable addition to the CIC database, especially as digital banks have the potential of penetrating the unbanked sectors,” CIC President and Chief Executive Officer Ben Joshua A. Baltazar said in a statement on late Thursday.
“Being a key driver of the country’s digital transformation, their participation in the Credit Information System can serve as a catalyst for broad-based financial inclusion and improved access to credit,” Mr. Baltazar said.
CIC’s submitting entities are institutions that lend to borrowers, including banks, nonbanks, trust entities, investment houses, financing companies, cooperatives, nongovernmental, micro-financing organizations, credit card companies, insurance companies, and government lending institutions.
The agency’s database currently includes the credit data of 33.1 million individuals. This is equivalent to about 49% of the Filipino adult population.
The CIC, through Letter Circular No. 2022-05, series of 2022 dated April 11, notified digital banks that they are covered by Republic Act 9510 or the Credit Information System Act.
Six entities were given licenses by the Bangko Sentral ng Pilipinas (BSP) to operate digital banks, namely the Overseas Filipino Bank (OFBank), Tonik Digital Bank, Maya Bank, UNO Digital Bank, Union Digital Bank, and GoTyme. OFBank, Tonik Digital Bank and Maya Bank are already operating while the rest are expected to be launched within the year.
Digital banks offer products and services through online platforms and do not need to set up branches.
The CIC is also bullish that digital banks will provide more lending opportunities to micro-, small-, and medium-sized enterprises (MSMEs).
“With the appeal and accessibility of financial services offered by digital banks for MSMEs, the CIC hopes that digital banks promptly comply so that MSMEs with low or no recorded credit data can build and improve their creditworthiness,” Mr. Baltazar said.
MSMEs make up about 99% of all registered businesses in the country and were among the most affected by the pandemic crisis. Many small businesses face difficulties in accessing formal lending due to lack of credit history.
The BSP has partnered with the Japan International Cooperation Agency for a credit risk database project that is aimed at boosting credit scoring models for small businesses. — Luz Wendy T. Noble