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  • Writer's pictureZiggurat Realestatecorp

43 M Filipinos have financial transaction accounts

The Bangko Sentral ng Pilipinas (BSP) said financial account ownership almost doubled in the country in two years to 56 percent of the adult population in 2021 versus 29 percent in 2019, based on the latest 2021 Financial Inclusion Survey (FIS).

The 56 percent is equivalent to 42.9 million of Filipino adults with transactional accounts. About 77.2 million of the total 110 million Filipinos are adults.

The BSP, which releases the FIS every two years, said the latest number of financial transaction accounts is the highest growth to date. Ownership of a formal account is a basic indicator of financial inclusion.

The expansion in account ownership was due to increased use of digital payments since the Covid-19 pandemic was declared in March 2020.

“Amid the latest figures, the BSP will continue to broaden its efforts to foster the wider adoption of digital technology, which has effectively enabled the onboarding of more Filipinos into the formal financial system,” said BSP Governor Felipe M. Medalla on Monday, Aug. 22.

The 56 percent growth in account penetration translated to an additional 22 million Filipinos opening an account in the two-year period which was 4.5 times higher than the six-percentage point (ppt) increase in 2019 from 2017, noted the BSP.

By demographic segments, the increase came from: the socio-economic class ABC; from Mindanao; from more educated Filipinos or those who completed at least vocational or college; and from those aged 30 to 39.

The FIS showed that six out of 10 Filipinos have changed their financial behavior during the pandemic. “Filipinos started saving more for emergencies (37 percent), began or increased their usage of online banking and digital payments (17 percent), and borrowed more (15 percent),” said the BSP.

Account ownership increased because of e-money accounts, which climbed to 36 percent in 2021 from eight percent in 2019.

This became the most common type of account among adults in the middle class and low-income population, as well as with those aged 15 to 49 years old. As of end-2021, there are 27.5 million Filipinos with e-money accounts compared to 5.7 million in 2019.

Meantime, the number of unbanked Filipino adults dropped to 34.3 million in 2021 from 51.2 million in 2019, or down by 16.9 million. The 34.3 million is about 44 percent of total adult population.

The share of adults with a bank account rose to 23 percent in 2021 from 12 percent in 2019. Banks remained the preferred formal institution for saving money by a third of those with savings, followed by cooperatives and microfinance institutions, noted the BSP.

Based on the FIS, of those with mobile phones and internet access in 2021, 60 percent performed financial transactions online, such as fund transfers and payments, which is a considerable jump from 17 percent in 2019.

In 2021, 93 percent of Filipino adults had a digital device and 77 percent had access to the internet, an increase from 70 percent and 53 percent in 2019, respectively.

“There are, however, challenges remaining for the financial inclusion agenda. The main barriers to account ownership such as lack of income and transaction costs persist. In addition, the lack of documents to open an account is still prevalent for a large segment of the population. Moreover, the survey found that over half of savers still keep their money at home,” said the BSP.

These challenges, more pronounced among lower income groups, highlight the importance of strengthening mechanisms that will support the financial resilience of the vulnerable segments of the population, the BSP added.

Medalla said that with the National Strategy for Financial Inclusion (NSFI) 2022-2028, the BSP will further collaborate with other government agencies, private sector and development partners to accelerate financial inclusion.

The BSP launched the updated in January this year as a shared blueprint for a broad-based growth and financial resilience. The updated NSFI also embraced the Philippine Development Plan and the AmBisyon Natin 2040.

Specifically, the new NSFI has clear-cut focus on micro, small and medium enterprises (MSMEs), start-ups, and agriculture financing. The MSME sector with 63 percent of total employment is a major source of livelihood for a large population of Filipinos.

The updated NSFI’s primary objective is financial resilience since many Filipinos, especially the poor, are facing increased vulnerabilities from the health crisis and climate change.

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