THE central bank has seen a spike in the number of Filipinos who now own a bank account.
According to the Bangko Sentral ng Pilipinas (BSP), the share of Filipinos who own an account climbed to 29 percent in 2019 from 23 percent in 2017, based on the recently released 2019 BSP Financial Inclusion Survey (FIS).
The BSP explained that the ownership of an account held in a formal institution including banks, e-money issuers and microfinance institutions (MFIs) is a basic indicator of financial inclusion.
The 2019 FIS was conducted in February to March 2020 just before the implementation of the enhanced community quarantine in response to the Covid-19 pandemic.
“The survey results—even as they already suggest significant progress—do not yet reflect the accelerated adoption of digital financial services seen in the midst and in the wake of the pandemic,” the BSP noted.
The six-percentage point increase in account penetration represents an additional five million Filipinos opening an account within that two-year period, a notable improvement from the 0.6 percentage point growth in 2017 from 2015.
The BSP said the growth was largely driven by e-money accounts which rose to eight percent in 2019 from one percent in 2017. MFI accounts also grew from eight percent in 2017 to 12 percent, on par with bank accounts which barely moved from 11.5 percent in 2017.
As uptake of e-money accounts significantly grew, so did the share of account holders who use their account for payment transactions—such as fund transfers and bills payment—which more than doubled to 39 percent in 2019 from 18 percent in 2017.
Account ownership among the poorest (class E) almost doubled from 14 percent in 2017, well below the 23 percent national average that year, to 27 percent in 2019, closer to the national average of 29 percent.
The top income group (class ABC) posted an account penetration of 43 percent. While still significant, the account penetration gap in socioeconomic classes has considerably narrowed in 2019 compared to 2017 where class ABC posted account penetration almost four times higher than class E.
The number of Filipino who are unbanked is estimated at 51.2 million, out of a total adult population of 72 million in 2019.
The lack of enough money remains the topmost reason for not having an account, as reported by almost half (45 percent) of the unbanked, followed by perceived lack of need for an account (27 percent) and lack of documentary requirements (26 percent).
The survey also revealed that only 40 percent of adults are aware of the basic deposit account (BDA), a low-cost, easy-to-open bank account introduced as a policy initiative of the BSP in 2018 designed to address the cited barriers.
The perceived lack of need for an account may be linked to the lack of awareness that an account can be a tool for convenient digital payments.
Over 80 percent of the unbanked have various payment transactions. They receive benefits from the government and wages from employers, and they pay government fees, loan amortizations, utilities and bills.
Yet the survey showed that these transactions are predominantly made in cash.
For instance, more than half or 56 percent of the recipients of government benefits received the funds via cash or check while 60 percent of working adults do not have an account into which they can receive their salary.
With the cooperation and support of government and private sector, receiving benefits and wages can be a strong incentive for the unbanked to open and use an account.
The survey also provided new insights on the use of mobile phones and the internet for financial transactions.
Sixty-nine percent of adults have a mobile phone while 53 percent use the internet. However, only 12 percent of mobile phone owners and nine percent of internet users use their mobile phones and the internet for financial transactions. Moreover, seven in 10 unbanked adults have a mobile phone which further represents an untapped opportunity for digital finance. Lack of awareness and trust are the main reasons for not making mobile or online financial transactions. (JOB with PR)