Philippines: Most Banks Now Pushing Microfinance, E-wallets
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Philippines, October, 29 2020 - A bank executive in Cebu said most banks are now geared toward microfinance and digital wallets to widen their reach among the micro, small and medium enterprises (MSMEs) and the unbanked sector.
Adonis Liang, assistant vice president and division head of business banking in the Visayas of the Bank of the Philippine Islands, cited his bank’s BPI BanKo which aims to provide microfinance services to mom-and-pop businesses like sari-sari stores.
Other banks are also engaged in micro-lending which is unsecured, Liang said in an online forum held by the Cebu Chamber of Commerce and Industry on Wednesday, Oct. 28, 2020.
Liang also said most banks are geared toward digital payments through mobile wallets Paymaya and GCash.
“This is the starting point for the unbanked sector. The advancement of mobile technology gives the unbanked sector and those that really don’t go to the usual brick-and-mortar banks the chance to apply for an account through these fintech (financial technology) application forms,” he added.
Liang said banks have partnered with fintech companies to penetrate the largely untapped unbanked segment.
In a separate online forum, government officials and private sector leaders called for a shift to digital payments.
Bangko Sentral ng Pilipinas (BSP) Gov. Benjamin Diokno presented the BSP’s Digital Payments Transformation Roadmap 2020-2023, which aims to strengthen customers’ preference for digital payments, and make more digital financial products and services available.
The first objective aims to convert 50 percent of the total volume of retail payments into digital form and expand the proportion of Filipinos with access to financial services to 70 percent.
The second objective aims to have more available innovative digital financial services that will enable the national ID system and the modernization of payment systems.
“The path towards digital transformation is an uphill journey. Each step requires collaborative engagement among stakeholders. Being prominent business leaders, you should spearhead the wider adoption of digital payments in the business community,” Diokno told members of the Makati Business Club.
Diokno earlier said the BSP targets to make the Philippines a cash-lite economy by 2023.
Since 2012, the Philippine government has committed to increase the use of digital payments.
The country is a founding member of the Better Than Cash Alliance (BTCA), a global partnership of 75 governments, companies and international organizations that aim to accelerate the transition from cash to digital payments to reduce poverty.
Despite this, the Philippines still has a long way to go in terms of adopting a fully digital economy.
Ruth Goodwin-Groen, BTCA managing director, said only two percent of supplier payments are made digitally by formal businesses while most informal businesses rely solely on cash.
In the private sector, only 12 percent of salaries are paid directly to account, she added.