Rural banks: Tapping the unbanked, accelerating countryside growth
Financial services in the Philippines continue to penetrate the country’s heartland, enabling people in the countryside to manage their finances well and get easy access to much-needed capital for their economic activities.
According to the Bangko Sentral ng Pilipinas’ (BSP) most recent Report on the State of Financial Inclusion in the
Philippines, the number of unbanked cities and municipalities in country improved to 571 in 2017 from 609 in 2011, or 38 percent lower. The same report also stated that the total amount of bank deposits grew at an average of 15 percent to P11 trillion as of June 2017 from 2012, with the number of depositors growing six percent to P44.4 million and the number of deposit accounts rising four percent to P55.3 million.
This gradual improvement in the number of unbanked localities in the country can only be attributed to a number of factors. One reason that quickly comes to mind is the rapid expansion of large universal and commercial banks in provincial areas. These financial institutions have quickly spread into major cities and first-class municipalities by way of newly established shopping malls and commercial strips. But their reach remains limited to these areas.
In distant, hard-to-reach municipalities, cities and provinces, rural banks fill the void created by the absence of universal and commercial banks. Their small-scale operation and footprint enables them to penetrate rural markets that larger banks are unable to. Most of the time, they are the townsfolk’s only lifeline, especially in times of dire financial need.
Such is the importance of rural banks in the countryside that there is even an organization whose sole purpose is to band together and look after the continuous growth and stability of the rural banking sector so that it can continue to take care of their depositors’ interests.
That organization is the Rural Bankers Association of the Philippines (RBAP).
RBAP has been looking after the rural banking industry for more than 60 years now. It has weathered so many adversities within their industry, danced to the tempo of different changes within the banking sector, and accomplished gargantuan tasks to keep rural banks relevant amid new trends in financial services worldwide.
This year, RBAP celebrates its 65th anniversary with its head held high and its eyes looking into the horizon for new opportunities and challenges. The
Philippine STAR talked to the president of RBAP and the Rural Bank of Digos Giovanni Gabriento to find out what the rural banking industry is looking forward to in the coming years.
STAR: Congratulations on your upcoming 65th Annual National Convention and General Membership Meeting! Being the leader of RBAP, what does it feel now that organization has reached this milestone?
Gabriento: Thank you! It is always an overwhelmingly happy feeling when you reach a milestone especially when you are part of it, and me being the president of RBAP, it makes me proud for this achievement.
STAR: This year’s annual convention tackles the theme, “Leading Onwards to Development and Inclusion.” As such, what activities do you have in this year’s convention that will discuss issues and matters that will lead to rural banks playing a bigger role in development and inclusive growth? Gabriento: This year’s theme commemorates my vision of rural banking that is fully adjusted to the technology we have around us. I am a huge supporter of financial technology because I see it as an advantage. So, we have invited BSP to speak about their recent regulations, especially the launch of InstaPay, the new payment system and how they plan to help us to achieve financial inclusion. Then, we have the credit guarantee groups like Agricultural Guarantee Fund Pool
(AGFP) and Home Guaranty Corporation (HGC) to talk about the options for rural banks in terms of credit guarantee. We have a whole lot more relevant topics that will be discussed in the event.
STAR: In the past few months that you’ve headed RBAP, what are some of the key landmark achievements of RBAP members in fostering rural development and inclusive growth?
Gabriento: RBAP has been visible and has projected a good image for the past few years. We made online advertisements and print ads with Globe and FintQ. Also, one of the best projects so far during my term is the shift of one member bank to cloud banking through the help of the Asian Development Bank. Cantilan Bank was the pilot for this, and it was successful. We are looking forward to more projects like this. Then, we already started the e-Shared Services (eSS) project that will help cater to the needs of member