Promoting access to financial products, inclusion and protection

The Bangko Sentral ng Pilipinas (BSP) aims to promote and expand access to financial products by all, especially the population’s currently unserved and vulnerable sectors. Access to responsive and responsible financial services empowers individuals and businesses to better manage finances, stay financially resilient and pursue livelihood and economic opportunities to improve overall welfare.

The general approach is to create the policy and regulatory environment that enables financial institutions to develop and deliver fit-for-purpose products in an effective and efficient manner. Policy issuances and reforms, through the years, have allowed banks to serve micro, small and medium enterprises through microfinance; opened up opportunities for electronic value transfers through bank and non-bank electronic money issuance; and enabled innovation in the delivery of a wide range of financial products targeted to underserved markets. This approach has earned global recognition as conducive to promoting financial inclusion.

Resulting gains in financial inclusion are evident in the increasing number of microenterprises that have access to a bank loan numbering nearly two million microentrepreneurs by the end of 2017, access to an account has increased to 34 percent of the adult population in 2017 from only 26 percent in 2011, cities and municipalities with no financial service provider has decreased to eight percent from 22 percent in 2011.

Building on these gains, the BSP has embraced the potential of digital technology as a critical enabler to further expand the scale and scope of financial services in the country. It has recognized that digitizing payments can be the gateway for Filipinos to enter the formal financial system. According to the 2017 Financial Inclusion Survey (FIS) Report, 88 percent of Filipino adults have payment transactions. The bulk of these transactions would be for personal purchases, bills and loans payment. Meanwhile, 32 percent of Filipinos are reported to be beneficiaries of remittance transactions, while 16 percent are senders. These payments are largely made in cash through over-the-counter facilities.

Digital financial inclusion

At the forefront therefore of BSP’s financial inclusion strategy is the promotion of an affordable, safe, efficient and convenient means of payment and the creation of a payments ecosystem characterized by an expansive network of access points, ownership of transaction accounts, and the facility to electronically transfer funds from one’s own account to any transaction account. The ability to use digital channels for payments and remittances, transfer funds electronically to accounts held in other banks and e-money issuers not only facilitates convenience, speed and affordability, but also enables much-needed information which providers can use to provide a broader range of financial services such as credit, investment and insurance.

TOWARD THIS END, THE BSP HAS ISSUED A PACKAGE OF POLICIES TO DEVELOP THE ENVISIONED ECOSYSTEM.

Recent BSP guidelines on no-frills or basic deposit account (BDA) democratize account ownership, which is needed to participate in a digital financial ecosystem. With a low opening deposit requirement (capped at P100), no minimum maintaining balance, and simplified know-your-customer and documentary requirements, the BDA addresses the considerations that usually discourage or prevent low-income earners from opening bank accounts. The bank account can then be used not only to store funds but to make and receive digital payments.

To further expand touch point for financial services, banks can now use thirdparty entities like grocery stores, pharmacies and other retail outlets as cash agents where bank clients can apply for a bank account or loan, make withdrawals and deposits, pay bills and transfer funds. As convenient,

non-intimidating access points, cash agents can effectively respond to unique needs of low-income clients and encourage their continued relationship with a bank.

Money service businesses and remittance agents are now covered by enhanced regulations against money laundering, promoting risk management and consumer protection. This provides better service to the many Filipinos who rely on these access points.

Under the guidance and directive of the BSP, banks and e-money issuers launched PESONet and InstaPay — payment schemes that facilitate efficient and interoperable electronic retail fund transfers. With interoperable payment schemes, a user needs to only have one account to do online payments — to pay merchants, billers or send money to friends and family. This spells convenience and affordability.

This package of reforms will revolutionize how each Filipino can access and use financial services in a manner that is convenient and appropriate to their needs and capacities.

Consumer proteCtion

The BSP also implements policies and regulations that protect the rights of financial consumers and ensure the responsible provision of financial services by BSPsupervised financial institutions (BSFIs). These are necessary to empower those with limited knowledge of the formal financial system and to promote financial inclusion.

The BSP requires BSFIs to adhere to the Financial Consumer Protection Framework — standards of conduct, to enable consumers to make informed decisions about their financial products and transactions. The framework covers key areas of disclosure and transparency, protection of client information, fair treatment and effective recourse.

As a second-level recourse, the BSP also provides assistance to financial consumers through the Consumer Assistance Mechanism (CAM), facilitating discussions with the relevant BSFIs and ultimately bringing the BSP closer to the Filipinos.

FinanCial eduCation

Even with the mechanisms in place, BSP reminds that consumer protection is a collective responsibility. Consumers need to exercise their rights and responsibilities, and elevate their financial literacy and financial capability. This is the rationale for the BSP’s Economic and Financial Learning Program (EFLP). The EFLP provides learning programs and leverages on partnerships to reach various audiences like children, college students, the working sector, investors, overseas Filipinos, and selected unbanked sectors to increase financial literacy and strengthen financial capability in the country.

The BSP is also ramping up its financial education campaign called PisoLit through social media, using Facebook as a primary platform to reach online millennials. Moving forward, the BSP will focus more on partnerships with public and private institutions, and leverage and add value to existing financial education initiatives. This will create a multiplier effect and elevate the financial literacy level of Filipinos.

The BSP believes that a financiallylearned citizenry with the ability to understand, select and use financial services that fit their needs can better benefit from participating in the formal financial system as depositors, investors and economic agents. Such citizenry would be able to protect themselves from fraud and harmful financial practices; and be more effective partners of the BSP in maintaining stable prices and ensuring a stronger, safer banking and payment systems.

national strategy For FinanCial inClusion

The task to achieve financial inclusion toward broad based growth is a significant one that requires multi-sectoral collaboration. Toward this end, the BSP led the crafting of a National Strategy for Financial Inclusion which defines the national vision for providing “effective access to a wide range of financial services that contributes to building inclusive growth.” Launched in 2015, the NSFI provides a platform for public and private sector coordination to ensure synergy of efforts to achieve shared objectives.

The BSP is the chair of the Financial Inclusion Steering Committee (FISC), the governing body comprised of 15 government agencies that provides strategic direction and guidance in the implementation of the NSFI and created by Executive Order No. 208 dated June 2, 2016.