A national strategy to get more Filipinos involved in the banking system, growing smartphone penetration plus the highest rate of “mobile money” adoption in the region contributed to the Philippines having the most improved level of financial inclusion.
In its 2016 Financial and Digital Inclusion Project Report on Advancing Equitable Financial Ecosystems, the Brookings Institution—one of the world’s oldest and most prestigious think tanks, said the Philippines had increased its overall score by 8 percentage points from last year’s score.
“This upsurge was attributed to the launch of the Philippine National Strategy for Financial Inclusion (NSFI); strong performance in terms of mobile capacity, as measured through smartphone penetration; and highest rate of adoption of mobile money accounts among the Southeast Asian countries included in the report,” a statement from the Bangko Sentral ng Pilipinas said.
For this year’s report, Brookings increased its sample to 26 geographically, economically and politically diverse countries, from 21 in 2015. These countries were assessed using varied criteria classified under four general dimensions: country commitment, regulatory capacity, mobile capacity and adoption of traditional and digital financial services.
Brookings also expanded the scoring criteria to include existence of a consumer protection framework for financial services, smartphone adoption and availability of merchant payments via mobile money and frequency of account usage.
The Philippines garnered the highest scores in country commitment (100) and regulatory environment (100), also achieved a high score in mobile capacity (94) and a more modest one in adoption (42). All these scores represent positive improvements from 2015 levels.
The 2016 report acknowledged the work of the BSP in shepherding implementation of the country’s financial inclusion strategy, and advancing the formalization of high-level inter-agency cooperation.
The BSP was also recognized for being a front-runner among central banks in establishing a dedicated financial inclusion unit; for its work on financial inclusion data and reporting; and for the issuance of enabling and proportionate regulations.
This includes the setting of quantifiable financial inclusion targets to measure the success of initiatives; and data collection focused on barriers to mobile ownership, connectivity, and SMS/data usage to better inform the development of inclusive mobile ecosystems, and consequently the provision of digital financial services.
Brookings also suggested greater coordination between financial and telecommunications regulators and industry players to address uncertainties in the regulatory environment, to scale up the provision of financial services to target markets, and facilitate the development of digital identification mechanisms crucial for on-boarding of marginalized markets into the formal financial system.