More towns get access to financial services

OVER A THIRD of towns in the Philippines remained unbanked as of June 2017, although more areas gained access to formal financial channels compared to a year ago, results of a recent central bank survey showed.

Some 571 local government units (LGUs) remained without banks as of the first semester, or 34.9% of 1,634 cities and municipalities. This improved from 589 unbanked areas in June 2016, the Bangko Sentral ng Pilipinas (BSP) said in a statement.

Progress has been slow, with the decline in unbanked LGUs averaging at 0.9% annually from 2011 to 2016.

A total of 11,343 bank offices and 19,500 automated teller machines ( ATMs) are operating nationwide as of end-June, with branches growing by an annual average of 4% over the last six years.

These platforms are “concentrated” in Metro Manila, Calabarzon, and Central Luzon, while the Cordillera Administrative Region and the Autonomous Region in Muslim Mindanao remained lagging, the BSP said in its latest Financial Inclusion report.

Access to banking offices remained limited in some areas, with 89 towns being served by micro- banking offices alone. These small bank outlets offer a limited array of services such as releasing small- scale loans, serving as bills payment centers and selling microinsurance products.

There are 44.4 million depositors holding 55.3 million bank accounts worth P10.998 trillion as of June 2017, against an estimated 101 million Filipinos. Of the number, 40% of the accounts are located in Metro Manila, accounting for two-thirds of total deposits.

Over 60% of bank accounts are considered low-value, with deposits at P5,000 or lower.

On the other hand, loans granted by banks reached P7.3 trillion as of end-June, with average annual growth at 17% over the past six years, the BSP said. Metro Manila borrowers took 85% of the outstanding credit.

Compared to regional peers, the Philippines stood in the middle of the pack in terms of access to banking, but is on the low end in terms of the number of accounts.

“In terms of usage, the number of deposit accounts per 10,000 adults in the Philippines was lower than most of our peers except Cambodia, Lao PDR, and Myanmar,” the central bank said.

NON-BANK OUTLETS

Meanwhile, non-banks stood as alternatives for areas in need of financial services with over 61,000 outlets, the BSP said, with the fastest expansion seen among electronic money agents.

“Pawnshops, cooperatives, and microfinance NGOs ( nongovernment organizations) had wider presence than banks and were the most common financial service providers in unbanked areas,” the central bank said, noting that only a tenth of LGUs remain unserved if non-banks are taken into account.

Pawnshops have a wider presence compared to banks, as these outlets are available in 73% of the country’s towns and cities.

REFORMS

The BSP is counting on its recently approved guidelines for “branch- lite” units to broaden financial inclusion in the Philippines.

The rules approved in December essentially allow banks to set up dressed-down branches in provinces and non- business districts, which is expected to remove the intimidating vibe of the usual brick- and- mortar bank offices.

A measure that will allow banks to offer basic deposit accounts is likewise being prepared by the regulator, which will relax maintaining balances, dormancy charges, and identity documents. This is seen to serve as the entry point for unbanked Filipinos to finally get aboard the formal financial system.

The National Baseline Survey on Financial Inclusion released by the central bank in 2015 showed that only 43% of Filipino adults had savings, with 68% of them opting to keep their money at home rather than placing them as bank deposits.

The BSP will release the results of its second baseline survey within this quarter.