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10 million Pinoys unbanked, WB says, as it nudges government, fintech firms

BusinessMirror’s file photo shows a branch of the Bank of the Philippine Islands in Makati City.

NEARLY 10 million Filipinos remain unbanked and the World Bank said the government, private sector, and financial service providers can help address this.

In its Global Findex Database 2021 report, the World Bank estimated that around 9.23 million Filipino adults remain unbanked. The Washington-based lender said millions of adults received government payments in cash only.

But Filipinos are not alone and they are part of the 1.4 billion people in the world who remain unbanked. The World Bank said efforts to expand access to financial services, including leveraging digital payments, should be undertaken.

“Digitalizing some of these payments could be cheaper and could reduce corruption for the government while bringing recipients into the formal financial system,” World Bank economists led by Saniya Ansar said in a Blog about the latest report.

“We already have evidence that this works—the Global Findex 2021 finds that 865 million account owners in developing economies opened their first financial institution account for the purpose of receiving money from the government,” they added.

In a survey of 1,000 Filipinos, the World Bank said 51 percent of adults interviewed have bank accounts; 47 percent of women own bank accounts; and 34 percent of poot adults have accounts.

In Cambodia and the Philippines, about 20 percent of unbanked adults—or about 10 percent of all adults—received government transfer payments in cash.

The World Bank said, however, that more than 80 percent of the unbanked who received such payments in these economies have a mobile phone.

The report noted that while online shopping is now popular among consumers, many still pay for these goods in cash. In the Philippines, 36 percent of adults bought something online, and three in four online shoppers paid only in cash for their purchase.

Access to financial services has gender, age, and income gaps. In terms of gender, there is an 8-percentage-point gap in account ownership in the Philippines; 15-percentage-point gap in age; and a gap of over 20 percentage points in terms of income.

“As we seek to move out of the pandemic and as governments seek to consolidate the momentum and expand access to digital banking services, policies must factor in protections for the most vulnerable among us, including women, the poor and those with limited educational attainment or financial literacy,” the World Bank economists said.

The World Bank said if more access to financial services is given to women, for example, they will have a louder voice in terms of household spending and decision making.

The report noted that the results of a field experiment in the Philippines found that women who used commitment savings products encouraged regular deposits into a personal account with a rural bank. This allowed them to spend for household goods relevant to their needs, such as washing machines.

Increasing access to financial services, including digital payments, can increase if companies use accounts to pay wages and salaries. Some 41 percent of wage earners in the Philippines received wages via bank accounts.

Remittances through accounts also help increase access to financial services. The World Bank said about half of adults in Cambodia, Mongolia, the Philippines, Russia, and República Bolivariana de Venezuela sent or received via accounts and money transfers.

Expanding access to financial services can also help address concerns of Filipinos, particularly through savings and other investments. The report noted that 64 percent considered health expenses their concern while 50 percent were worried about old age.

The World Bank report stated that on average, some 14 percent of adults save. This may include saving cash at home or saving in the form of assets such as livestock, jewelry, or real estate.

Some are more savvy and invest in investment products offered by equity and other traded markets or by purchasing government securities.

“In 26 developing economies, more than half of those who saved did so only using some other way. In the Philippines, for example, 30 percent of adults (55 percent of savers) saved in only some other way, making it one of the economies with the highest share of adults doing so,” the report stated.###

Image credits: Nonie Reyes



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