A lot more Filipinos have no bank accounts
World Bank survey show
The World Bank (WB) said Filipinos have improved its capability to manage and save up their money, proof that financial literacy and government efforts to promote financial inclusion is succeeding, however many middle-income earners still do not have bank accounts.
“It pays to be wise with the way we handle money – that’s what this survey is telling us,” said World Bank Country Director Motoo Konishi. “If people have more knowledge about money matters, this can help them access financial services. Promoting financial literacy is therefore important to achieve greater financial inclusion and boost the growth of micro and small enterprises.”
The survey – “Enhancing Financial Capability and Inclusion in the Philippines – A Demand-side Assessment” – estimated that about 20 million Filipino adults save money but only 10 million of this total have bank accounts.
WB senior financial sector specialist who supervised the survey, Nataliya Mylenko, stated that 98 percent of those surveyed with savings but do not have bank accounts earn about 50,000 a month. “This suggests that there are significant opportunities for expanding financial inclusion among low- and lowerincome groups in the Philippines.”
The survey also showed that six of 10 Filipinos or 59 percent are planning how they spend money. Fifty seven percent of those who plan or budget their expenses say that they have money left after paying for basic expenditures, compared to forty two percent of those who do not plan their spending, said the World Bank.
The survey, conducted from February to September last year, indicated that the most commonly reported obstacles to owning bank accounts are: not having enough money (reported by 20 percent); lack of need for an account (18 percent); lack of trust (17 percent); distance (16 percent); lack of documents (10 percent); “the bank doesn’t treat people well” (9 percent); and high cost (9 percent).
According to Mylenko, the central bank’s efforts to enhance financial inclusion programs will expand its reach further. “In July this year, the BSP (Bangko Sentral ng Pilipinas) launched the country’s national financial inclusion strategy,” she said. “This will be a very important platform for coordinating policy and programs for achieving greater financial inclusion and improving financial education among Filipinos.”
Survey results indicate the need to develop financial products such as micro-deposits that meet the needs of consumers, particularly the lowerincome groups, said the World Bank. Other findings from the survey: • 23 million adult Filipinos report that their households run out of money for food and other necessary items either “sometimes” (29 percent) or “regularly” (26 percent). Even among those earning more than 50,000 a month, 23 percent state that they run short of money for basic necessities. Among the households that report that they run short of money for basic necessities, the use of credit is near universal – 94 percent borrow to cover costs.
• Filipinos are more likely to use informal credit and saving services than formal financial services. Only four percent of respondents report having a mortgage, 5 percent have a credit card and 10 percent availed credit product from a formal financial institution. At the same time, more than a third rely on informal savings and credit.
• Those who are knowledgeable about financial matters (those who are “financially literate”) are more likely to report that they have money left after paying for basic necessities and less likely to say that they have borrowed beyond their means. Higher financial literacy scores are strongly correlated with the level of education.