The Philippines’ central bank is sharpening the focus of its financial inclusion strategy, setting priority initiatives and targets within a six-year time frame, and taking into consideration the impact of Covid-19 as well as the increased digitization of financial services.
The Bangko Sentral ng Pilipinas (BSP) is due to release an updated National Strategy for Financial Inclusion (NSFI) at the start of 2022. “The Covid-19 pandemic and the rapid advancement of digital technology are bringing new possibilities as well as challenges in the pursuit of financial inclusion,” says BSP governor Benjamin Diokno.
In a meeting last week discussing the new framework, Diokno noted that the changing landscape requires a new strategy.
“This impetus compels us to revisit the original strategy document and ensure that the NSFI remains a responsive framework for driving financial inclusion as a whole-of-nation undertaking,” Diokno says.
The updated NSFI will cover a six-year time frame, from 2022 to 2028, and will include priority initiatives, key performance indicators, and targets, a departure from the previous six-year roadmap, which provided guiding principles but had no time frame nor targets.
Ahead of the January 2022 launch, the BSP also pushed for several strategies for greater financial inclusion, including encouraging offline digital payment solutions for transactions that do not require internet connections, or so-called offline e-payments.
Based on the BSP’s own 2019 Financial Inclusion Survey, internet access penetration remains uneven in the Philippines. About 60% of those living in Luzon, which includes the national capital region, have some access to the internet, while only 40% of the population in the Visayas island group is connected. Even lower, only 30% of those living in Mindanao have internet access, the survey finds.
But while the BSP is pushing for offline e-payments for retail users, it is also urging rural lenders to lean on financial technology to capture more customers, especially during the pandemic.
Diokno calls on rural banks or banks serving micro, small and medium enterprises, agriculture and other vulnerable sectors across the country to extend even more digital services to their customers.
According to the BSP, as of end-June there are 3,139 rural banks nationwide. However, of these, only 32 rural banks offer e-payments and digital peer-to-peer payments via PESONet or InstaPay.
“We urge the members of the Rural Bankers Association of the Philippines to make use of these technologies to expand your reach and maintain competitiveness in the New Economy,” Diokno says.