50.4% of Filipinos benefit from financial inclusion

But ratio lower than 51.4% in 2021, the last time that WB published its triennial report

The proportion of Filipinos with financial accounts slightly fell in 2024 compared with three years ago, the World Bank (WB) Group reported, highlighting the challenges of onboarding the rest of the population to the formal financial system.

In its Global Findex 2025 report, the Washington-based institution found that 50.2 percent of Filipinos aged 15 years old and above owned an account with banks and other regulated entities such as credit union, microfinance institution or a mobile money service provider.

This was 1.2 percentage point lower compared with the previous share of 51.4 percent back in 2021—the last time that the WB Group published its triennial report.

The latest data on financial account ownership in the Philippines were based on the results of 1,000 interviews, with a margin of error of 3.5 percent.

Underperforming vs peers

As it is, the rate of financial account ownership in the Philippines was lower than the 83.3 percent average for the East Asia & Pacific and 70.4 percent for lower-middle-income economies.

The findings of the WB Group also fell short of the goal of the Bangko Sentral ng Pilipinas to include at least 70 percent of Filipino adults in the formal financial system by 2023.

The BSP has yet to release the results of its latest financial inclusion survey.

Notably, the decline in account ownership happened even as BSP data showed that 57.4 percent of total retail transactions in the country in 2024 were cashless. This surpassed the government’s 2024 goal to convert 52 to 54 percent of retail transactions to digital.

‘Concerning’ decline

John Paolo Rivera, a senior research fellow at state-run think tank Philippine Institute for Development Studies (PIDS), said the dip in financial account ownership was “concerning” as it ran counter to the “digital gains” that the country had seen recently.

“It suggests that economic hardship, job informality and limited digital access in rural areas may have offset earlier progress. The pandemic may have pushed people to open accounts for aid or transactions, but without sustained income or digital literacy, usage and retention likely fell,” Rivera said.

WB Group data showed that among the Filipinos who own accounts, 33.5 percent were maintained with banks “or similar financial institutions.” Meanwhile, 32.7 percent of them were “digitally enabled” accounts, and 28.8 percent were mobile wallets.

This is the first time that the report included data on personal mobile phone ownership and internet use.

Technology as enabler

The report added that 23.9 percent of Filipinos saved money using formal financial accounts in 2024, up from 20.8 percent in 2021.

Globally, the WB Group said mobile phone technology played a key role in the increase in formal saving.

“Financial inclusion needs more than just access. It needs meaningful use,” PIDS’ Rivera said.

“The government and private sector must invest in financial education, rural connectivity and trust-building to bring the remaining half of Filipino adults into the system,” he added.

Source: Inquirer

Protecting every saver

How deposit insurance can be a lifeline during unforeseen circumstance.

Waking up to a home flooded up to hip level or reporting for work only to find out you have been let go by the company are scenarios one would wish were just a bad dream. For Karla and Paulo, however, this was their reality when Typhoon Ondoy and the global pandemic happened, respectively. Faced with the sudden dilemma, they found themselves asking: How do I begin again?

Emergency situations such as natural calamities and virus outbreaks strike without warning. Having a savings account — or better yet an emergency fund, can spell the difference between feeling helpless and having peace of mind.

Karla and her family lost almost all of their belongings, but thankfully the money she tucked in the bank was left unharmed. “Buti na lang may savings ako. Maliit man o malaki na sakuna, importante na ready ka, na may savings ka sa bangko para may mahuhugot ka. Hindi mo need maghintay ng tulong sa iba dahil kaya mong tulungan ang sarili mo at ang pamilya mo (It was a good thing I had my savings in a bank. Whether it is a small or big calamity, it is important that you are ready, that you have savings in the bank that you can use. That way, you won’t need to wait on others for help because you are capable of helping yourself and your family),” Karla recalled with a sense of relief.

This sense of security in the banking system is exactly what the Philippine Deposit Insurance Corporation (PDIC) aims when fulfilling its twin public policy objectives of protecting depositors and promoting financial stability. As the state deposit insurer, the PDIC provides a financial safety net through deposit insurance to depositors of banks up to the maximum coverage amount set by law.

In Paulo’s case, his unforeseen emergency was brought about by COVID-19. The pandemic not only taught him that nothing is permanent but also stressed the importance of saving money in banks. As the family’s breadwinner, he immediately needed to find another way to earn a living after being laid off. That was when he tried delivery work.

“Dati wala akong effort para mag-ipon sa bangko. Lahat ng sinasahod ko napupunta agad sa mga bilihin at mga bayarin. Nung nawalan ako bigla ng trabaho, dun ko na realize na ang hirap pala pag wala kang naitabi. Kaya ngayon, kahit pa P10 o P20 lang na extra, kapag pinagsama-sama malaking dagdag na rin para sa emergency fund (I used to not make an effort to save in banks. What I earn went straight to buying the necessities and paying the bills. When I suddenly lost my job, that was the only time I realized just how hard it is when you have nothing saved. So now, I save even if it is just an extra P10 or P20 to add to the emergency fund),” he said.

According to a report by the Bangko Sentral ng Pilipinas (BSP), as of September 2024, more than 450 cities and municipalities in the country remain unbanked. This means that many Filipinos may still be unaware of the benefits of saving in banks and having their hard-earned money protected by the PDIC.

To sustain the protection the PDIC provides to depositors, it continuously strengthens the Deposit Insurance Fund (DIF), the funding source of deposit insurance built primarily through the collection of semi-annual assessments from banks.

Starting March 15, 2025, the DIF guarantees that deposits up to the maximum deposit insurance coverage (MDIC) of P1 million per depositor per bank are protected. This is double the previous MDIC of P500,000, which was last adjusted in 2009.

This increase in the MDIC not only demonstrates the stability of the DIF but also ensures more deposit accounts are insured, thus reinforcing public trust and confidence in the banking system. Hopefully, more individuals, like Karla and Paulo, can confidently choose to save in banks, knowing that the PDIC is their ally in safeguarding their savings and the welfare of their family during challenging times.

Source: Business World

CMEPA and the 20% tax: What it means for your bank savings

Netizens were in an uproar when banks implemented new tax rates on savings interest, prompting many to ask: “What’s going to happen to my savings?”

The changes stem from the Capital Markets Efficiency Promotion Act (CMEPA), a new law signed by President Ferdinand Marcos Jr. in May and enacted in July. It aims to introduce key reforms to level the playing field in trade and investment. One such reform is the reduction of the Stock Transaction Tax (STT) from 0.6% to 0.1%.

However, what triggered the uproar is the uniform 20% tax rate on interest income.

The Department of Finance (DOF) has since clarified misconceptions fueled by social media buzz, especially the mistaken belief that people’s actual bank savings are being taxed 20%.

In reality, it’s not the money in your account being taxed, but the interest it earns while sitting in the bank. The DOF also emphasized that this is not a new tax, but an existing one that has now been standardized under CMEPA.

“1998 pa lang, may 20% tax na ang interest na kinikita ng ating mga karaniwang deposito sa bangko,” the DOF said in a Facebook post. 

(As early as 1998, there was already a 20% tax on our interest being made by ordinary deposits in the bank.) 

The DOF summarized the new tax rates as follows: 

CMEPA and the 20% tax: What it means for your bank savings

The DOF argued that the old system favored those who are richer, as their studies showed that they are the ones holding long-term deposits (TD). 

Rizal Commercial Banking Corp. chief economist Michael Ricafort told Philstar.com that the impact will likely be felt more by those with Foreign Currency Deposit Unit (FCDU) accounts and US dollar time deposits.

“TD amounts become bigger, in terms of the larger interest income generated and now the higher 20% withholding tax that these are subjected to since July 1, 2025,” he said. 

“But for smaller amounts, the changes could be minimal/negligible,” Ricafort said. 

What can the public gain from the CMEPA?

While the CMEPA would certainly make the Philippines more appealing to investors after the lowering of several investment taxes, how could it help the common Filipino who wants to simply earn money? 

The DOF argued that the CMEPA would encourage ordinary Filipinos to invest and diversify their income sources. Other than the reduction of the STT, the CMEPA also decreased the documentary stamp taxes (DST) rate from 1% to 0.75%, as well as removing it completely from the collective investment schemes. 

“These measures are seen to cut transaction costs, encourage market participation and financial planning, boost market liquidity, make the country’s equities market regionally competitive, and increase capital market growth,” the DOF said in a statement. 

Ricafort agreed with the DOF, saying that local investors would have more choices in diversifying their investments with hopes of generating more returns.

While the CMEPA may ease investment, the question of whether or not the average Filipino is willing to invest their money in the current economic environment remains, especially amid inflation and global uncertainties. 

Ricafort said that now is still a conducive time for investing. 

“Bond yields near cycle/multi-year highs that are favorable for investors,” he said. 

What can the public do to mitigate CMEPA’s impact? 

While smaller savings accounts may not feel the effects of the CMEPA, some have raised that middle-class earners who wish to save more money in the long run are more likely to feel the effects of the CMEPA. 

Ricafort advised that they could seek alternative means to save or invest their money. He said that savers could try out a Personal Equity and Retirement Account (PERA). A PERA account is a voluntary retirement savings account that could supplement your SSS. 

Investment is also an option, but Ricafort warned newcomers to be cautious.

“This is investment related, not deposits, that are subject to market conditions or higher risk-higher return trade off as a source of diversification,” Ricafort said. 

Source: Philstar