Pinoys still wary of credit products
Filipinos continue to hold an unfavorable view of credit, TransUnion Philippines said, believing that it is linked to the idea of incurring debt, excessive spending and a lack of financial prudence.
"Clearly, there's significant work to be done to change perceptions," TransUnion Philippines President and CEO Pia Arellano said.
"Just as it takes a village to raise a child, it will take sustained collaboration to build the road to financial literacy and inclusion in the Philippines," she added.
Credit card adoption remains low in the Philippines, the consumer credit reporting firm said, at just 25 percent.
This contrasts with countries such as the United States and Hong Kong, where the proportion of adults owning credit cards is significantly higher at 70 percent and 69 percent, respectively.
"While utilizing the power of data can unlock greater economic opportunities for more people, local challenges to financial inclusion persist," Arellano said.
"There remains a need for the formal financial sector to work together to educate Filipinos on the benefits of credit products and address misconceptions surrounding credit to improve financial inclusion in the country," she added.
Arellano emphasized the importance of gaining a deeper understanding of consumers, highlighting that knowledge and data should serve as drivers to enable individuals to adjust and respond effectively.
Based on research presented at TransUnion Philippines' recent Big Data Summit, lenders who grasp the changing needs of consumers can confidently expand their operations.
Amid continued wariness about incurring debt, the findings showed growing demand for credit among consumers, with 66 percent for credit cards, 23 percent for personal loans, and 11 percent for housing and auto loans.
Although credit cards still dominated demand, TransUnion said there was a noticeable increase in inquiries for personal loans, suggesting a shift in consumer preferences.
"This is driven by digital banks and fintechs (financial technology firms) who have entered the market," TransUnion said.
Source: Manila Times