Filipinos’ access and use of formal financial products and services continues to improve in the country, the Bangko Sentral ng Pilipinas (BSP) said in its latest report on the state of financial inclusion.
The report noted out of 1,634 local government units (LGUs) that include cities and municipalities, the number of unbanked areas or those without access to financial services declined to 571 LGUs or 34.9 percent of the total in June last year from 609 LGUs or 37.3 percent in 2011.
As of June 2017, there were also 11,343 banking offices and 19,500 automatic teller machines (ATMs).
Banking offices grew at an average annual rate of four percent from 2011 to 2016 while ATMs increased at a faster rate of 12 percent during the same period, the report noted.
In addition to banks, there were over 61,000 non-bank financial service providers (FSPs).
Growth was fastest among mobile money agents which are retail outlets where people can convert cash to electronic money and vice versa mostly through the use of mobile phones.
Pawnshops, cooperatives, and microfinance NGOs had wider presence than banks and were the most common FSPs in unbanked areas. Only 10 percent of LGUs remained unserved if non-bank FSPs were taken into account.
In terms of usage, there were 44.4 million depositors and 55.3 million accounts with outstanding balance of P11 trillion as of June 2017.
From 2011 to 2016, the number of depositors and deposit accounts increased at an average annual rate of six percent and four percent, respectively.
The total amount of deposits grew at an average rate of 15 percent during the same period.
Despite improvements in account ownership, the number of deposit accounts per 10,000 adults in the Philippines was still lower than most of its Association of Southeast Asian Nations (ASEAN) peers except Cambodia, Laos, and Myanmar.
Building on these modest gains, the BSP said it has issued new policies that will allow greater financial inclusion.
One of these is the recently approved regulation allowing banks to put up “branch-lite” units to further expand the physical reach of banking services especially to unbanked and underserved LGUs.
The BSP is also finalizing the policy framework that will encourage banks to offer a “basic deposit account” that will address the usual barriers in account opening such as high opening amount and maintaining balance, dormancy charges, and lack of identity documents.
The report cited other ongoing initiatives with potential to expand financial inclusion on a larger scale by harnessing the power of technology innovations including the National Retail Payment System (NRPS) project which aims to lessen the dependency on cash in carrying out financial transactions, and the current work with other government agencies and legislators to develop a national biometric-based ID system that can facilitate easier onboarding of banking clients.
These are on top of the policies that the BSP issued in 2017 such as the regulations on cash agents, virtual currency exchanges, and technology-enabled Know Your Customer (KYC) rules to support digital financial inclusion. RIZA LOZADA