BSP exec says e-commerce key to boosting savings
The rise of e-commerce will be key to increasing the savings rate of Filipinos at the so-called bottom of the pyramid, allowing the country’s financial system to mobilize these currently untapped funds to finance economic activity.
The Bangko Sentral ng Pilipinas (BSP) said the Philippines leads in the world in enabling banks and other financial institutions to reach parts of the population in the remote areas through new technologies.
“It makes perfect sense for banks to expand their markets,” BSP Assistant Governor Johnny Noe Ravalo said.
In an interview on Friday, he said the country’s savings rate has improved over the last four years due to efforts to use electronic “access points” in areas where putting up new bank branches might not be financially or operationally feasible.
Ravalo was speaking at the opening of the BSP’s new “Money Matters” exhibit at the Gateway mall in Quezon City. The exhibit aims to help teach children how to save and be smarter with their own savings.
“In fourth, fifth and sixth municipalities, you’re no longer talking about the next branch. You’re talking about an access point and it’s possible that access point is through e-banking,” he said.
Ravalo said access points such as allowing people to do financial transactions through their mobile phones and other new technologies would expand the market of banks and help improve the lives of residents in remote areas.
“You don’t need to put up a branch in those areas. For as long as you can provide an access point, you allow them to participate in the financial market,” Ravalo said.
He said the Philippines was ahead in the world in its microfinance policies that allowed small entrepreneurs to tap loans more easily, allowing them to expand their businesses and increase income levels.
Ravalo said the country’s savings rate relative to gross domestic product (GDP) stood at 24 to 25 percent. He said that while this was still lower than those in most neighbors in the region, the country’s savings rate was still a significant improvement from 18 percent two to three years ago.
He said the country’s relatively low savings rate was not an indication that Filipinos did not save money or had no money to save.
“If banks are going to stay in traditional markets where people come in formal attire to deposit and withdraw, you are marginalizing a big part of the population,” Ravalo said. “This does not mean that this segment of the population does not save. It just means you’re not tapping their savings.”
