NEDA, Queen Maxima partner to promote inclusive finance

MANILA, Philippines —  Queen Maxima of the Netherlands and the National Economic and Development Authority (NEDA) are collaborating to promote financial inclusion in the Philippines.

Maxima met with NEDA Secretary Arsenio Balisacan to discuss innovations to address challenges in financial inclusion in the country.

They discussed identity authentication, enhancements to digital payment schemes and developments in the country’s preliminary efforts in open finance.

Open finance involves the sharing of customer-authorized data among financial institutions and third-party providers to promote innovative financial solutions.

It is designed to place a strong emphasis on user privacy, secure data handling and inclusivity.

Open finance is aligned with the country’s overall development blueprint, the Philippine Development Plan 2023-2028.

As part of the push for financial inclusion, the Bangko Sentral ng Pilipinas (BSP) and the Japan International Cooperation Agency have developed a credit risk database scoring model, which is expected to increase lenders’ confidence in financing small and medium enterprises.

In 2023, the BSP also initiated the PH Open Finance Pilot to develop technical and operational standards for an open finance ecosystem in the Philippines.

Onboarding

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, Maxima said.

“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 BSP, the share of Filipino adults with bank accounts soared to 56 percent in 2021 from 29 percent 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 percent 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