SEN. Francis Escudero called for cooperation between the public and private sectors to reach out to more unbanked and underserved Filipinos through digital technologies.
According to him, there are more people in this country who have no bank accounts than anywhere else in the world.
Citing data from the government, he revealed that 70 percent of Filipinos aged 15 years old and above are “unbanked,” or more than double the 31 percent of the adult population internationally.
“May we reach this [global] level in the near future,” he said in his keynote address during the Cebuana Lhuillier Financial Inclusion Forum, dubbed “#KayaNa!,” held recently at New World Hotel in Makati City.
At the digital landscape increasingly informs everyday life, the lawmaker is confident the so-called financial inclusion, or a state wherein there is effective access to a wide range of financial products and services by all, could soon be realized.
This is by leveraging on people’s mobility that could be pivotal in bridging them to the formal banking system right at their fingertips.
Considering that the mobile phone penetration in the Philippines is at 110 percent, he noted this technology, through apps, now paves the way for branchless banking, crowdsourcing, blockchain, and even peer-to-peer village financing, among others.
“[So] we can actually leapfrog to doubling this figure of financial inclusion in another two to three years,” Escudero said.
The Bangko Sentral ng Pilipinas (BSP), he noted in particular, could be pivotal to achieve this since its supervisory power has been expanded—by virtue of the New Central Bank Act which was ratified in the Senate late last year—to create policies or regulations for the adoption of these new technologies and trends to help address the issue of financial inclusion.
Expecting the Shari’ah Banking Law to be enacted before Congress adjourns in the next three weeks prior to the May 2019 midterm elections, the senator sees this measure, which seeks to organize and regulate Islamic banks in the country, also helping to increase the number of “banked” Filipinos. Currently, only around 30 percent of the country’s adult population have bank accounts.
Because of their Islamic faith, he said Muslims are not allowed to deposit their wealth or money in the bank as it is considered a sin per the Koran, the equivalent of the Holy Bible of Christians.
“It is also a sin to charge interest [or riba, which is prohibited by the Shari’ah],” the senator added, citing that this belief literally has led for most of them to keep their money or some forms of value in their house or any unsafe storage.
“There are roughy 11 million Muslim Filipinos in the country, and half of them are adults. So if you’re talking of approximately a population of 106 million [nationwide, there will be around] 5.2 million Filipinos that will immediately be banked as opposed to unbanked if we pass this law,” Escudero said.
Not to be discounted, the legislator pointed out, is education in so far as encouraging the public to save through the banking system. Case in point is the collaboration of the BSP and the Department of Education to teach financial literacy among elementary and high-school students nationwide.
“For me, this is highly needed to make our fellows better understand the benefits of becoming banked compared to the unbaked or underbanked,” Escudero said.
On the private sector’s part, on the other hand, he lauded innovative business players like Cebuana Lhuillier, which has just launched its micro-savings to provide Filipinos with a more convenient and affordable means to save their hard-earned money.
Such offering enables the people to break through the barriers of saving in banks, including numerous requirements; high initial deposit, maintaining balance and dormancy charges; and lack of access to banking facilities.
Opening a Cebuana Lhuillier Micro Savings account requires only one valid ID and a minimal P50 initial deposit. Since the microfinancial service company’s network of branches is comprised of 2,500 retail infrastructures, account holders can deposit and withdraw anywhere at their most convenient hours.
“This should have been done actually a long time ago [in the private sector] to make it simpler and easier for people to actually get a bank account,” the senator said, citing that the innovative offering of Cebuana Lhuillier is worth emulating by other industry players.
“It is not simply making it accessible that should be our goal; it is actual usage and availment that should be our goal,” he stressed.