Study Notes Major Gaps in Financial Accessibility
A study by banking and financial services provider Mambu GmbH revealed there are significant gaps in financial accessibility and awareness despite the increasing use of digital payments.
“While most recent figures estimate that only 34.5 percent of Filipinos hold a formal bank account (that is, are ‘banked’), digital payments have surged in the Philippines since the beginning of the Covid-19 pandemic, and this uptick in usage has encouraged further digital innovation,” the company said. It added that while apps are enabling mobile payments for as many as 33 million Filipinos, “many of these users remain officially unbanked.”
Mambu Managing Director for Asia-Pacific Myles Bertrand was quoted in a statement as saying that “while terms like ‘banked’ and ‘unbanked’ are used frequently, they don’t really look at the crucial issue of access to financial services.”
“So while someone may hold a formal bank account, they may not necessarily have access to any credit, or even be able to get to their bank branch to make a transaction,” Bertrand said. “And another person may be technically ‘unbanked’ but be able to access all of the services that they need, via innovative digital apps and services. So it really is improving that full access to financial services that we need to focus on.”
Bertrand said that in a country like the Philippines, where it seen having over 100-percent mobile penetration, “it is clear that digital innovation, particularly in mobile payments, is going to be the great equalizer.”
“The other area of focus needs to be on financial awareness; that is, helping consumers understand the implications of using certain financial products, and also being aware of the financial services available to them,” Bertrand said. “In our survey we saw that more than 80 percent of banked consumers felt their financial situation would be better if they knew more about how finances worked. And yet, we also found that the majority of banked consumers are turning to the Internet, rather than their banks, for financial information.”
Bertrand sees this situation as “a wasted opportunity for banks.”
“But again, technology is the answer—banks should be looking at apps and other digital communications services to roll out education programs and information to their customer bases,” he said.
The study by the Berlin, Germany-headquartered firm reveals that one in four (26 percent) unbanked believe that financial institutions could help them get a bank account by providing more personalized financial advisory services.
The study of 2,000 global consumers revealed 56 percent of banked customers claiming that there are other services they should be able to access.
“The difference between banked and unbanked may seem pretty distinct, but our research found a financial accessibility gap amongst both groups, as well as a gap in understanding of financial accessibility,” the company said. “This proved true when we found that 81 percent of banked customers felt their situation would be better if they knew more about how finances worked, with more than half (58 percent) of unbanked customers feeling the same.”
The company said it saw this situation coming to light during the Covid-19 crisis, with 77 percent of respondents noting that the pandemic has exemplified the importance of being able to understand and access a wide range of financial services.
“However, we found that according to consumers, financial institutions aren’t taking the necessary steps to boost accessibility.”
The study revealed that more than half of unbanked customers (65 percent) were less than pleased with their financial situation.
In the banked community, one in four (25 percent) are not happy with their current level of understanding about their finances and options available to them.
“Interestingly, we found that in the median and above wage brackets (equaling $63,000 and above per annum), nearly half (48 percent) stated they didn’t know how to open a bank account,” Mambu said. “When we posed the question of who bears responsibility for financial education, a fair few―56 percent in fact―feel that financial institutions should be responsible for educating consumers about their finances.”