Reynaldo C. Lugtu Jr. l October 6, 2023 l Business World
Financial inclusion, or the availability, and accessibility of financial services to all segments of society, is a fundamental pillar of economic development and poverty reduction.
Financial inclusion in the Philippines has come a long way. Data from the latest Bangko Sentral ng Pilipinas’ (BSP) Financial Inclusion Survey (FIS) show the rate of account ownership soared to 56% in 2021 from a mere 29% in 2019. This means the number of unbanked Filipinos dropped to 34.3 million (representing 44% of the total adult population) in 2021 from 51.2 million in 2019. That is a reduction of 16.9 million!
Despite these developments, a sizeable portion of the population remains unbanked. Moreover, many others are underbanked, meaning they have limited access to essential financial services, such as credit and savings. Several factors contribute to financial exclusion in the Philippines.
One is geographic barriers. The country’s archipelagic nature and the concentration of financial institutions in urban areas make it challenging for rural and remote communities to access banking services.
In addition, many Filipinos lack the necessary identification and documentation required to open a bank account. This is coupled with limited financial literacy among the population, which leads to mistrust of formal financial institutions.
However, technology is providing promising avenues to address these issues. For instance, mobile banking and digital wallet platforms have emerged as powerful tools for financial inclusion in the Philip-pines. Examples like GCash and Maya have made it possible for individuals to access a range of financial services using just a smartphone. These platforms offer services such as bill payments, remit-tances, and even microloans, catering to the needs of the unbanked and underbanked population.
Another example is how UNOBank integrated both the Brankas Direct and Brankas Disburse APIs into their mobile app, which allows users to add money faster, without any intermediaries, and send money to other banks and e-wallets without the extra layers and fees. Users can easily load money from Union Bank of the Philippines, Inc. (UnionBank), Bank of the Philippine Islands and other banks and send money to BDO Unibank, Inc., GCash, Metropolitan Bank & Trust Co., Land Bank of the Philippines and over one hundred other banks and e-wallets. Ultimately, this makes the experience for UNOBank users simpler and it aligns with the digital bank’s goal of keeping everything customer-focused and giving users a wonderful experience.
In transportation, which plays a significant role in daily life in the Philippines, commuters have embraced mobile-based payment systems for various transportation modes, including buses and trains. MPT DriveHub users, for instance, can now reload their RFID accounts directly from their BDO and UnionBank accounts. All this is made possible with the Brankas Direct API, which helps Metro Pacific Tollways Corp. to improve the customer experience and reduce transaction fees.
Opportunely, Brankas, the leading open finance technology company that enables innovation and embedded finance for brands globally, and Appsynth, a digital innovation consultancy firm, are organizing an executive roundtable titled “Open Banking: From Traditional to Trailblazing through Technology – An Exclusive Gathering of CXOs” happening on Oct. 19.
Joining the roster of speakers/panelists are Albert Tinio, co-CEO of GoTyme, Delfin Jay Sabido IX, PhD, chief innovation and transformation officer of China Banking Corp., Ronald Jose Puno, chief technology and transformation officer of UnionDigital Bank, Todd Schweitzer, CEO, and co-founder of Brankas, and Bob Gallagher, founder and CEO of Appsynth.
The roundtable promises to uncover the various strategies that can leverage technologies for open banking, as well as discuss best practices to accelerate financial inclusion using open banking technology.
More work must be done to ensure that most Filipinos have access to financial services. This is where open banking plays a critical role.
*** Reynaldo C. Lugtu Jr. is the founder and CEO of Hungry Workhorse, a digital, culture, and customer experience transformation consulting firm. He is a fellow at the US-based Institute for Digital Transformation. He is the chairman of the Digital Transformation IT Governance Committee of FINEX Academy. He teaches strategic management and digital transformation in the MBA Program of De La Salle University. The author may be e-mailed at rey.lugtu@hungryworkhorse.com