THE PHILIPPINES is among the top countries in terms of financial inclusion, a global advisory group said, noting that local rules allow wider use of digital platforms to reach the unbanked.
The Philippines ranked fourth among 55 nations in terms of financial inclusion, according to the 2018 Global Microscope of the Economist Intelligence Unit (EIU), making the country the best in Asia together with India, which shared the same global rank.
Still, the Philippines saw its score slip to 72 (on a scale with 100 as best score) from 78 in 2016, when it ranked third, again together with India.
Colombia, Peru and Uruguay were the top three countries for financial inclusion.
“The Philippines’ central bank, Bangko Sentral ng Pilipinas (BSP), has been ahead of the curve in identifying opportunities and setting guidelines for financial inclusion. Its focus on creating a digital finance ecosystem has led to the introduction of a sound payments infrastructure that helps the various financial-sector players to reduce their costs and further their outreach,” the EIU said in its report.
The report cited recent reforms introduced by the BSP which allowed more non-banks to offer more financial services to Filipinos, which they said opened up more avenues for the public to use formal channels for money transfers and payments.
Among the significant changes cited in the report were the creation of “branch-lite” units, or basic branches deployed outside business districts and urban areas in order to reach more Filipinos.
Rules allowing basic deposit accounts and cash agents also helped create a more accessible formal financial system.
“The BSP has a clear regulatory framework for e-money issuers but relies on the ‘test-and-learn’ approach for other financial technology players,” the EIU added.
Under the National Retail Payment System, the BSP targets to shift cash-heavy transactions to digital avenues, which is expected to broaden access to financial services and spur economic activity.
Through this system, the central bank wants to raise the share of e-payments to 20% of all transactions in the Philippines by 2020, coming from a measly one-percent share back in 2013.
The EIU also flagged that e-money accounts, which have been steadily growing, are currently not covered by deposit insurance.
Another key barrier to inclusion is the small size of lenders which are focused on serving the retail market.
Thrift, rural and cooperative banks are dwarfed by universal and commercial banks, and thus “limits the reach,” the London-based firm added. — Melissa Luz T. Lopez