15.8M Filipinos own an account

The number of Filipino adults who own an account is estimated at 15.8 million or around one fourth of the total adult population, according to the 2017 Financial Inclusion Survey (FIS) conducted by the Bangko Sentral ng Pilipinas (BSP).

Ownership of an account that can be used to save money, receive salary, send or receive remittance, and pay bills is a basic indicator of financial inclusion. Banks continue to have a higher share (11.5 percent) in account penetration than non-banks such as microfinance non-government organizations (8.1 percent), cooperatives (2.9 percent), and non-stock savings and loan associations (0.3 percent). Only 1.3 percent of adults have an electronic money (e-money) account.

For the 52.8 million adults who do not have an account, 60 percent reported not having enough money as the main reason, followed by the perceived lack of need (21 percent) and absence of documentary requirements (18 percemt). Other reasons cited are high cost (10 percent), lack of knowledge in account opening (nine percent), lack of work (eight percent), and lack of awareness (eight percent).

The survey also found out that Filipino adults saved more and borrowed less in 2017. The percentage of adults with savings increased to 48 percent from 43 percent in 2015, while incidence of borrowing decreased to 22 percent from 47 percent in 2015. The share of borrowers obtaining credit from informal sources declined significantly to 40 percent in 2017 from 72 percent in 2015.

Microfinance

Gains in microfinance are evident in the survey results. Growth in formal savings was driven by microfinance NGOs, and it was only in microfinance NGOs where the number of borrowers experienced growth from 2015 to 2017. The increased uptake of microfinance products and services could be a result of the long and sustained effort to promote microfinance in the country.

Women’s financial inclusion is positively demonstrated across different financial products and services. While bank and e-money account penetration is slightly higher for men, women are twice likely to have an account than men in general. The gender gap favoring women is driven by in- stitutions such as microfinance NGOs and cooperatives. Whereas most developing countries face the persistent challenge of women’s financial exclusion, the Philippines presents an interesting case wherein the level of financial inclusion is significantly higher among women than men.

Digital technology

While formal account penetration remains low and growth is modest, there are opportunities for greater financial inclusion enabled by digital technology. At present, accounts are still underutilized for payment and remittance transactions. Among account owners, only 18 percent are receiving salary, 12 percent are sending/receiving money, and six percent are receiving pension through their account.

Nearly nine out of 10 adults have payment transactions of which 60 percent are paying in cash. Over the counter remittance transactions are very prevalent among senders and receivers of money as 93 percent used remittance agents in sending money while 83 percent used them for receiving money in the past six months. Digitizing these payment and remittance transactions is a crucial step towards digital financial inclusion.

The survey shed light on the ways to improve existing services and issues that need to be addressed to increase adoption of electronic payments. Convenience is the top consideration in choosing a channel for payment and remittance. For instance, over 70 percent of adults who made a remittance transaction cited convenience as the key factor in choosing a particular channel. Aside from convenience, most senders and recipients of money cited cheaper charges, more physical access points, and faster services as the best ways to improve fund transfer services.

Concerns on availability, trust, and distance appeared markedly in automated teller machines, while lack of awareness and lack of connectivity are closely associated with electronic platforms such as internet and mobile banking. Nearly half (46 percent) of account holders who have access to the internet are ambivalent about e-payments due to issues such as hacking, personal security breaches, and unsafe access. /