Financial technology to help push Islamic microfinance in Mindanao

Financial technology-driven Shari’ah-compliant microfinance is key to accelerating financial inclusion in the Autonomous Region in Muslim Mindanao (ARMM), said an executive of Fintq, the financial technology arm of Voyager Innovations.

Speaking at the Seventh Global Islamic Microfinance Summit in Istanbul, Turkey, Fintq Managing Director Lito Villanueva said that there is a need to push for an enabling framework for Islamic microfinance in the Philippines in order to break down the barriers in accessing digital finance.

“We are not telling the whole story of financial inclusion if Islamic banking and finance are absent in the equation. There is an urgent need to push for necessary legislation, infrastructure support and technology enablement for Islamic microfinance,” said Villanueva, the only Filipino and non-Muslim financial technology (fintech) executive included in the roster of speakers.

In the Philippines around 5.6 percent of the population are Muslims, with a geographic
concentration in the ARMM, composed of five provinces, two cities and 116 municipalities.

“ARMM has so much potential given its resource-rich landscape. Combined with its industrious population, the region has huge economic potential. However, from the time it was established in August 1989, ARMM remains the poorest region in the country, with less than 70 percent of the adult population still unbanked and underserved. There are only 20 banks and 28 ATMs [atuomated teller  machines] servicing almost 4 million ARMM residents. Not a single bank there is Shari’ah compliant. That’s why there is an opportunity to better serve and enable the communities with Islamic microfinance, enabled by financial technology,” Villanueva said.

In line with the situation at ARMM, Villanueva calls on industry players to support the creation of a task force whose duty is to look into establishing a Shiri’ah-compliant Islamic microfinance framework. The task force was proposed to be led by the existing Microfinance NGO Regulatory Council, which was created by Republic Act 10693, or the Microfinance NGOs Act.

The council is chaired by the Securities and Exchange Commission (SEC), together with the Department of Finance, the Department of Social Welfare and Development and the Department of Trade and Industry, and in partnership with the Bangsamoro Transition Commission and the National Commission for Muslim Filipinos.

“We support financial-inclusion initiatives, and we look forward to consider proposals from like-minded fintech companies regarding Islamic microfinance in the country. This is something that we are willing to look into,” SEC Chairman Teresita J. Herbosa said.

Fintq, together with its partners, have recently launched a national movement called “KasamaKA” to further drive financial inclusion in the countryside. KasamaKA (loosely translated to mean as financial inclusion) aims to provide greater access to financial services to every Filipino. The initiative is supported by the Bangko Sentral ng Pilipinas, the SEC and the Insurance Commission.

“Deploying Shari’ah-compliant Islamic microfinance, initially in Marawi, would be more meaningful, impactful and sustainable socioeconomic intervention that could help alleviate poverty and promote peace and development in the region,” Villanueva concluded.

Fintq is the leader in customer-centric, demand-driven, mobile-first, value-creating and inclusive digital financial innovations through collaboration across strategic markets with award-winning and pioneering platforms, products and services. It is the largest and the only financial-technology business in the country with diverse digital banking and finance portfolio of platforms including lending, security, micro-savings, micro-investments, insurance, disbursements, microcredit and virtual banking, among others.

 

For more information about Fintq and all of its products and services, visit www.fintq.com.