In the pursuit of economic growth and poverty alleviation, ensuring equal opportunities becomes a pivotal factor. The Bangko Sentral ng Pilipinas (BSP) has taken a significant step in this direction by introducing the National Strategy for Financial Inclusion 2022-2028, building upon the success of its predecessor, the 2015-2020 road map.
This comprehensive plan transcends the mere expansion of financial services; it aspires to foster sustainable and inclusive economic growth throughout the nation.
Let's delve into the key pillars of the National Strategy:
Opening financial doors for everyone
The BSP aims to ensure that every Filipino, especially those in remote and underserved areas, can easily access formal financial services. This strategic approach involves reinforcing the banking infrastructure, advocating for the adoption of digital financial services and fostering the establishment of financial access points. The goal? To ensure comprehensive financial inclusion and bridge existing gaps in accessibility.
Financial literacy and keeping you safe
Recognizing the importance of financial literacy, the strategy places a significant emphasis on educating the public about financial products and services. It also focuses on enhancing consumer protection measures to ensure that all users of financial services are well-informed and protected against potential risks.
Per Philippine Fintech Report 2023, BSP Circular 1166 introduces updates to the rules governing e-money and electronic money issuers in the Philippines. These updates encompass new requirements related to risk management, interoperability, transaction limits and liquid assets. The BSP also updated guidelines to its digital bank framework of December 2020, with regard to corporate and risk governance of digital banks as well as the applicable prudential regulations on capital, leverage and liquidity.
Harnessing technology for financial evolution
In a bid to embrace the digital era, the BSP is actively steering the financial sector toward a digital transformation. The strategic initiative promotes the widespread adoption of digital platforms, electronic payment methods and innovative financial technologies to enhance the efficiency and accessibility of transactions, with a particular emphasis on serving remote areas.
Based on the Philippines Fintech Map 2023, we now have a total of 299 fintech (financial technology) companies across different services. Major players are from the payment sector, followed by lending, remittances, e-wallet, and others. In summary, it aims to make money moves smoother and easier, even in far-off places.
Support for micro, small and medium enterprises (MSMEs)
Now, let's talk about our homegrown heroes — the MSMEs. They're the heart and soul of our economy, and the BSP aims to provide comprehensive support by facilitating easier access to credit, offering financial literacy programs for entrepreneurs and fostering a conducive environment for growth.
Traditional lending models often require collateral, which can be a challenge for many SMEs. Some lending initiatives in the Philippines provide collateral-free loans based on alternative credit scoring models.
This helps broaden access to financing for businesses that may not have substantial assets for collateral. The numerical shift from traditional to digital transactions among SMEs is noticeable. Centralized data from the Department of Trade and Industry (DTI) reveals that, as of 2023, 70 percent of SMEs have adopted digital payment solutions.
Inclusive policy environment
The BSP acknowledges the importance of a regulatory environment that fosters financial inclusion. With this, the BSP is teaming up with everyone — government agencies, industry players and nongovernmental organizations to create a policy that ensures everyone has a fair shot at financial well-being.
Monitoring and evaluation
The BSP's strategy is adaptable, with a robust monitoring and evaluation framework in place. Regular assessments will gauge the effectiveness of implemented initiatives, enabling timely adjustments and ensuring that the goals of financial inclusion are steadily met.
In a nutshell, BSP's National Strategy for Financial Inclusion 2022-2028 is like a financial revolution that's here to make our lives easier, our businesses stronger and our future brighter.
For SMEs, exploring diverse financing options, understanding loan terms and staying informed about government programs and fintech innovations offer broader opportunities for financial support in today's dynamic economic landscape.
The collaboration between regulatory bodies, financial institutions and innovative fintech companies is crucial in shaping a more inclusive and resilient financial future for the Philippines.
Source: Manila Times