Improved Financial Inclusion Key to Philippines’ Economic Recovery

Bangko Sentral ng Pilipinas’ (BSP) Governor Benjamin Diokno indicated that improving the financial inclusion landscape can aid in the recovery of the domestic economy from the pandemic.

In a taped speech during the Pru Life UK Online Investment briefing, he said “financial inclusion has become a compelling strategy for sustainable growth.”

Diokno mentioned that the government’s efforts to include more Filipinos into the financial system are now bearing fruit as shown partly by the increase in the number of people who now own financial accounts, primarily electronic money (e-money) accounts.

Citing the results of the 2019 Financial Inclusion Survey (FIS), he said account ownership jumped to 29% that year from about 23% in 2017, where an additional five million people have new accounts.

During the same period, Diokno said formal credit rose from 14% to 19%; insurance, from 18% to 23%; and investments, from 23% to 25%.

He said Filipinos are slowing embracing insurance products “to bolster their financial resilience.” Diokno felt that “investments are especially critical to realising financial inclusion, as these lead to greater market participation and enterprise opportunities.”

He added that investing can now also be done electronically after the central bank allowed trust corporations to distribute their unit investment trust funds (UITF) through third parties, namely individuals and institutional agents.

“Investments provide people the means to enhance their financial health, as well as to protect their welfare against economic risks and sudden downturns, such as this ongoing pandemic,”

Amidst these improvements, Diokno said the reality is that 75% of the population, or about 54 million, do not have investments.

“While this figure may be disappointingly low, it shows, however, immense room for growth in the investment market. In recent years, the BSP has taken the necessary steps to ensure that it will be easier for Filipinos, especially the unbanked and underserved, to be financially included by leveraging on technology,”

he added.

The benefits from using technology in the financial inclusion bid was significantly felt when the government placed Luzon under an enhanced community quarantine (ECQ) from mid-March until end-April, which was extended until end-May for Metro Manila.

The government was able to disburse its financial aid program by transferring the funds either to the beneficiaries’ bank accounts or their e-money accounts.

Diokno said the volume of PESONEt, an electronic fund transfer mode, and InstaPay, a real-time, low-value payment system, rose by 143% and 820%, respectively, last August alone.

BSP had also recently released its Digital Payments Transformation Roadmap 2020-2023 which charts its initiatives and strategies in advancing an efficient, inclusive, safe and secure digital payments ecosystem.

Featured image: Governor Benjamin Diokno – Gumamit ng Cards o E-Payments Para sa mga Kinakailangan Bilhin, via Youtube