Digital banks boosting financial inclusion in PH

THE country’s digital banks have sustained impressive growth, an industry group claimed, paving the way for unbanked Filipinos to have better access to financial services.

At the end of 2023, the number of people using digital banks was said to have grown by 27 percent, much larger compared to the 4.0-percent growth in the general banking sector.

The total number of digital bank users was also said to have hit 5.9 million as of December last year.

“Digital banks are changing the game for financial inclusion in the country beyond access,” said Angelo Madrid, president of the Digital Bank Association of the Philippines (DiBA PH) and Maya Bank.

“This kind of growth in such a short amount of time is unprecedented in terms of onboarding the unbanked and underserved,” he added.

The country has six licensed digital banks: GoTyme Bank, Maya Bank, Overseas Filipino Bank, Tonik Bank, UnionDigital Bank, and UNO Digital Bank.

These organizations are the founding members of the industry association DiBA PH.

Madrid reported that these banks nearly doubled its deposits from over P35 billion in 2022 to P69 billion last year.

Moreover, its gross total loan portfolio increased from over P11 billion to nearly P25 billion during the same period.

Data from the Bangko Sentral ng Pilipinas (BSP) Financial Inclusion Survey in 2021 showed that out of the 56 percent of adults with financial accounts, only 23 percent have bank accounts.

Additionally, only 31 percent of adults with savings keep their money in banks, and just 4.0 percent of adults with loans obtain credit from banks.

Madrid stated that digital banks have overcome infrastructure limitations to greatly improve financial inclusion since its introduction. And they now provide deposit accounts and credit to populations usually overlooked by traditional banks.

“The growth of digital banks highlights the sustained shift in consumer demands towards accessible, responsive, and user-friendly financial services,” BSP Deputy Governor Chuchi Fonacier said.

“We are pleased with the digital banking sector’s trajectory and its rippling effect towards a larger banking trend of optimizing technology in providing financial services. We now keenly anticipate the next wave of innovative and bespoke services that will address the needs of the banking public,” she added.

DiBA PH Vice President and Chairman of Tonik Digital Bank Inc. Long Pineda emphasized that the next three years are crucial for strengthening the digital banking sector’s foundations.

Pineda said their goal is to expand lending operations and foster trust among investors and customers, highlighting the sector’s commitment to sustainable growth and enhanced financial inclusivity.