By Ney Villasenor
While there is a huge push to bridge the gap between the banked and the unbanked in the Philippines, a huge number of the Philippine population still remain bereft of benefits of financial tools, as barriers, such as proximity to commercial banks, trust in lenders and even economic perception still linger.
We are a long way from reaching a more financially inclusive Philippines, but while the traditional way may seem far too lengthy, we believe that there is a shortcut to this goal, so to speak. We just have to look at the most often used device in the world—the mobile phone.
Over the past decade, the Bangko Sentral ng Pilipinas (BSP) has strengthened its initiatives in promoting financial inclusion. It has launched several programs aimed at cutting the processes and eliminating the barriers to gaining access to financial tools and services.
According to the World Bank, a financially inclusive society is where people and businesses have access to useful and affordable financial products and services that meet their needs. This means that financial tools, such as payments, savings, credit and insurance are readily available to them, all while ensuring that the use of these services are sustainable for the end-users.
In a financially inclusive society, a fisherman in the province of Sulu should be able to tap into credit in order to help him scale his operations faster by buying a new boat. Likewise, an expecting mother in Cagayan should also be able to have savings in order to finance her delivery and be able to provide for her future child.
By promoting financial inclusion, a fresh graduate with a business idea should be able to secure funding for his future enterprise. This is the very picture that the Central Bank wants to paint, and we are encouraged by the developments that the BSP had initiated in the financial regulatory space.
So far, we have seen a multiagency approach in tackling critical pain points in addressing the gap between the banked and unbanked. Different agencies, such as the Department of Education, the Civil Service Commission, and the Central Bank had been working hand in hand to develop new means of increasing financial literacy.
Likewise, the future national ID system will provide a much needed boost to bring financial services to the masses. It has been one of the key hurdles of individuals in participating in the financial landscape since day one. By providing free national ID to citizens, the government is removing a hurdle for people to gain access to a bank account.
Another development is the huge push for the stronger implementation of the National Retail Payments System, which aims to migrate 20 percent of total transactions to noncash means, especially digital payments.
Today, we have a very strict but open regulatory environment that fully supports the vision of having a more financially inclusive Philippines through programs, such as regulatory sandboxes, promotion of e-money, democratized personal credit products and rules on more efficient customer verification
processes.
With the emergence of mobile money technology, we are on the right track to reaching the industry’s goal of increasing the banked to at least 70 percent in 2023, a target that no less than BSP Governor Benjamin Diokno announced. This may sound like an ambitious and tall order given that only 3 out of 10 Filipino adults have bank accounts, but we believe that it is doable.
Financial technology (fintech) is a means to bringing the much-needed financial tools closer to the palms of Filipinos. By leveraging innovation and advances in data science, fintech offers Filipinos a wide range of financial products that affords them the ability to participate in the financial landscape.
There are a number of e-money issuers in the Philippines that offer varied financial services, such as savings, credit and insurance. Through their mobile phones and apps, Filipinos can now access, enjoy and capitalize on opportunities that were previously far from their reach.
Our shared goal in the fintech space is to cater to the spectrum of needs of all sectors of society—especially the unbanked and the underbanked. Through fintech we are able to help people manage their finances better while reducing vulnerabilities to financial distress, debt, and poverty.
Financial inclusion is not exclusively beneficial to the unbanked. According to a report from Ernst & Young Ltd., promoting inclusivity in finance helps drive economic expansion, as more and more people participate in commerce and trade. Growth potentials, the report concluded, could reach as high as 30 percent such as in Kenya.
The Asian Development Bank also found that increasing access to financial instruments helps curb inequality, as it helps empower the poor to invest in their future.
Championing financial inclusion through technology, which makes access to savings, credit, and insurance a lot easier, is the future. Leveraging on the ubiquity of mobile phones, we are now able to make it easier for everyone to participate in the financial landscape—from the poor to the rich.
We have a huge opportunity to bridge this gap through fintech, as almost everyone in the Philippines now own a handset or two. Through fintech platforms, such as GCash, we are able to help the government achieve its goal of creating a more inclusive society.
By simplifying the processes and providing solutions that are tailored to the demands of time, we are helping shape the Philippines to become a more financially inclusive country, one where the fisherman, the mother, and the fresh graduate with a huge plan ahead have the power to unlock their dreams through financial security.
The author is Vice President and Chief Corporate Affairs Officer of GCash.