ADB grants $655,000 to PH rural banks

THE Asian Development Bank (ADB) has provided a fund for nine Philippine rural banks and a bank consortium aimed at leveraging digital transformation within the banking industry.

The Manila-based lender said on Monday that it will provide grants totaling $655,000 to six banks from Luzon, one from the Visayas and two from Mindanao.

The awardees are Banco San Vicente, Camalig Bank, MVSM Bank, Rural Bank of Guinobatan, Rural Bank of Medina, Rural Bank of Montalban, Rural Bank of Porac, Rural Bank of Silay and Rural Bank of Tandag.

Also included in the awardees is the Good Bank Consortium composed of three rural banks.

The grants form a component of the ADB’s Fintech for Inclusion Transformation (FIT) program, supported by the High-Level Technology Fund and the Republic of Korea e-Asia and Knowledge Partnership Fund.

Selected from rural banks across the country catering to women, farmers, fisherfolk, and micro, small and medium-sized enterprises, the grant recipients were chosen based on their digital transformation project proposals submitted after the program’s initiation in June 2023.

The Rural Bankers Association of the Philippines (RBAP) and the Bangko Sentral ng Pilipinas are actively backing the grant program, the ADB said.

“The FIT program builds on ADB’s efforts to utilize technology to increase the efficiency, sustainability and resilience of the finance sector, especially those which service underserved sectors in the country,” ADB Director for the Finance Sector Group Emma Xiaoqin Fan said.

The grant awardees are aiming to achieve more efficiency in their operations, reduce operational expenses and friction costs, expand their reach, improve customer service and build more resilient financial institutions overall.

Some of the digital transformation proposals involve putting up cloud-based core banking systems, loan origination systems and credit scoring systems.

According to the ADB, it organized a sequence of workshops and consultations with industry experts to aid applicants in developing practical digital transformation solutions.

The ADB enlisted the services of a consulting firm to assess proposals, perform due diligence, conduct interviews, and evaluate the impact and institutional health of eligible applicants.

The FIT program is part of the ADB-financed Inclusive Finance Development Program, which supported government reforms to expand Filipinos’ access to financial services, especially the unbanked segment of the population.

The reforms are linked to the government’s National Strategy for Financial Inclusion.