Focus on onboarding Filipinos into formal financial system urged

MANILA, Philippines — The Philippines has made significant progress in pushing financial inclusion since 2015, but more work needs to be done in onboarding Filipino adults into the formal financial system, said Queen Maxima of the Netherlands, the UN Secretary General's Special Advocate for Inclusive Finance for Development.

“Payments alone are not financial inclusion. A lot of (micro, small and medium enterprises) or small-sized enterprises do not have access to the credit they need to actually make their investments. There’s also very little access to insurance,” she said at a media briefing at the central bank office in Manila.

There is little access to real saving mechanisms and productive credit, she said, noting that few Filipinos have the capability to save money.

Based on the 2021 Financial Inclusion Survey (FIS) of the Bangko Sentral ng Pilipinas (BSP), the share of Filipino adults with bank accounts soared to 56% in 2021 from 29% in 2019.

Filipino adults with bank accounts doubled to 42.9 million from 20.9 million, translating to an additional 22 million accounts opened between 2019 and 2021.

Consequently, Filipinos without an account dropped to 34.3 million from 51.2 million.

In October 2023, BSP Governor Eli Remolona Jr. said the share of Filipino adults with bank accounts reached 65% of the adult population in 2022.

The BSP has yet to release its official data since the FIS is conducted every two years.

More work needs to be done in authenticating and making national identification accessible, extending digital payment and credit access and reducing the cost of financial services, Maxima said.

The Philippines should also ensure last-mile access solutions and decent internet connectivity, especially in small remote islands, she added.

The gender gap in financial inclusion must also be reduced, she noted.

“One of the things that we see is that the cost of connectivity is still very high and the quality of that connectivity is not very good,” she said.

“We need to really go to the poorest and to the most distant places. We need to make a lot of investments jointly with the private sector to basically improve connectivity, the quality, the speed and also reduce the prices,” she asserted. — Keisha Ta-asan, Alexis Romero