BSP: PH on track in digital banking, financial inclusion goals despite pandemic

MANILA, Philippines—The Bangko Sentral ng Pilipinas (BSP) believes the Philippines can meet its ambitious goals to improve digitalization and financial inclusion in two years to boost inclusive growth.

Speaking at an online forum of the Asian Development Bank Institute (ADBI), BSP Governor Benjamin Diokno described his vision for the Philippines as a digital-heavy, cash light society.

“Fifty percent or half of all transactions should be digital by 2023 and 70 percent of Filipino adults should have formal bank accounts by 2023,” he told a group led by ADBI Dean Tetsushi Sonobe ahead of the multilateral lender’s annual meeting next month.

Diokno explained that the Philippines has always been committed to “growing on a sustainable basis” while also being committed to reducing poverty incidence. Prior to the pandemic, the country made headway in reducing poverty to 14 percent in 2018 from 25 percent in 2016.

The BSP role was to enable safe and easily accessible financial products and services for all, Diokno said.

ADBI vice chair Peter Morgan said the Philippines is “highly regarded on its programs and strategies to achieve financial inclusion.”

The discussion highlighted how the pandemic has been a catalyst for financial digitalization, as mobility restrictions prompted more people to use digital payments.

In 2020, over 4 million new electronic financial accounts were created in the Philippines.

Cybersecurity is top of mind for the BSP as it seeks to build public trust in digital banking.

Diokno said “digitalization measures go hand in hand with ensuring a safe cybersecurity environment” with fintech institutions facing the “same regulatory environment as banks.”

He also explained that the government’s strategy to increase internet access across the country is concurrent and crucial to the BSP’s efforts to expand financial inclusion.

The governor also provided details on how the BSP is running financial and digital literacy programs with local communities like those of fishermen and state institutions including the civil service and the Philippine National Police.

Diokno said he expected a further surge in the use of digital platforms for payments and in the number of Filipino adults with financial accounts over the near term, highlighting that the BSP is on track in its financial inclusion and digitalization goals.

The national ID system, mass registration for which is ongoing, will help facilitate the Philippines’ digitalization and financial inclusion goals. This will address the problem of lack of formal IDs among the marginalized, which is a major barrier for them to open bank or financial accounts.

Speaking on behalf of the entire BSP, Diokno said the agency “will not allow the pandemic to take away our focus on structural reforms.”

TSB