The adverse economic impact of the coronavirus pandemic on the country is being compounded by the fact that majority of Filipinos continue to be poorly informed about financial literacy issues, and even more have limited or no access to banking services.
Thus said the Bangko Sentral ng Pilipinas (BSP) chief, as he called on the financial sector stakeholders over the weekend to capitalize on the opportunities presented by the ongoing public health crisis to broaden the reach of banking services across society.
“Financial distress is a reality for Filipino families living from paycheck to paycheck, those relying on low-income livelihoods and those dependent on remittances from relatives abroad,” BSP Governor Benjamin Diokno said. “Even families who were doing relatively well are increasingly becoming vulnerable as the pandemic continues.”
In particular, he noted that financial “unpreparedness” limits the ability of families to cope and recover from the socioeconomic impact of the new coronavirus disease, or COVID-19, and added that, even without a crisis, the failure to save for specific goals such as an emergency fund or the unnecessary expenses that lead to over-indebtedness could compromise the health, harmony and happiness of families.
The central bank chief said that, at present, only 23 percent of adults have bank accounts, leaving the most vulnerable “unbanked” individuals with no channels through which government’s social assistance can be quickly channeled.
In addition, only 4 percent of the country’s adult population use electronic payments. Nearly half of adults—48 percent in total—have savings, but 68 percent of them keep their savings at home.
According to Diokno, over one-third of Filipino adults are unable to meet regular spending needs and resort to loans to deal with emergencies, only 18 percent have insurance coverage, and only 3 percent invest in financial instruments.
“Aside from lack of budget, lack of awareness and perceived high costs are often cited by respondents as key reasons for not opening an account, not saving, not using e-payments and not getting insurance,” he said.To address the issue, the central bank is strengthening its literacy campaign to enhance public trust in the digital finance ecosystem and promote the use of digital transactions locally. INQ