National ID system to boost number of Pinoys with access to financing

THE creation of a centralized identification system is expected to increase the number of Filipinos with access to formal financial tools, especially since financial technology companies are on the rise.

Fintqnologies Corp. Managing Director Lito M. Villanueva said the centralized identification system “will close the financial gap in the country,” calling it a “great equalizer to scale financial inclusion.”

“The recently signed Philippine Identification System Act effectively gives unbanked and uncarded Filipinos the legal recognition they need to be able to live fully as citizens such as having easier access to financial services,” Villanueva, who also chairs the Fintech Alliance in the Philippines, said on Sunday.

Having a national ID allows at least 105 million Filipinos to benefit from having a valid proof of identity. Such is designed for universal coverage, data integrity and security, and optimum utility.

President Duterte signed on August 6 the Philippine Identification System Act of 2018, which spells out the details for the single official ID for Filipinos. Under that law, the government will issue an ID that will integrate data from different government agencies.

Based on studies conducted by the Bangko Sentral ng Pilipinas (BSP), the lack of a national ID has been detrimental to the financial inclusion thrust of the government, resulting in only 22.6 percent of Filipino adults with access to formal banks and nonbank financial institutions.

The Central Bank also cited the lack of a national ID as one of the culprits causing the decline in loan disbursements by formal financial institutions last year.

“With the national ID in place, it will now be easier for everyone to avail themselves of financial products that can help improve their quality of life,” Villanueva noted.

For a person to open a bank or a nonbank account—from money issuers—he has to undergo a so-called know-your-customer (KYC) process that requires the submission of identification cards issued by the government, namely, passport, licenses or social security cards, among others.

Having a national ID will allow a person to undergo a more seamless KYC process, hence giving them access to financial tool, such as debit, credit, loans, investments and insurance.

“It will also protect consumers as it addresses different pain points to prevent them from being victims of fraudulent activities,” Villanueva added.

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Sources regularly see Lorenz at telco and transport conferences. He graduated from the University of Santo Tomas, and has been covering the beat since 2013. He likes to featurize stories, and tries to find another angle for spot news. He travels during his spare time, and likes his coffee black -- no cream, no sugar.

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