BSP wants PH banks to copy Bank Raykat Indonesia’s financial inclusion model

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) want local financial institutions to learn key lessons from one of Indonesia’s largest banks in a bid to give so-called unbanked Filipinos greater access to the digital economy through the use of satellite internet technology.

In a press briefing, BSP Governor Benjamin Diokno held up the business model of Bank Rakyat Indonesia — which specializes in small-scale and microfinance banking for over 30 million clients — as a success story that can be replicated locally through the newly approved broadband internet delivery method.

“In the case of Bank Rakyat, the bank was able to deploy 51,000 antennas or teleports to connect their regional branches and ATMs nationwide,” he said. “We hope that many of our local financial service providers can replicate the Bank Rakyat experience.”

Recently, President Duterte issued an executive order that allows small service providers to directly access satellite systems to build broadband facilities. Thus, entities such as cable TV operators and utility cooperatives can operate their own satellite broadband facilities to serve local communities.

“Satellite technology is ideal for areas where it is more expensive to roll out wired or mobile networks, such as islands like the Philippines,” Diokno said. “This supports the government’s goal of connecting the whole country in the shortest possible time.”

“As web access becomes widely available and affordable, banks and other financial service providers will be able to set up more access points like automated teller machines and cash agents that rely on connectivity,” he added. “This fosters financial inclusion and digitalization.”

The use of satellite technology is also seen to help address the disparity in internet access penetration among the country’s island groups.

As revealed by the BSP’s 2019 Financial Inclusion Survey, web access in Luzon was at 60 percent, the Visayas at 40 percent, and Mindanao at 30 percent.

The BSP has also provided its inputs to the proposed implementing rules and regulations of the Palace order. One such input is to allow banks or a consortium of banks to operate their own satellite broadband for their operations, for the benefit of their consumers.

Aside from the new executive order, the interagency Financial Inclusion Steering Committee chaired by the BSP also supports the passage of the Open Access in Data Transmission Bill that aims to lower barriers to entry and simplify the licensing process for broadband network providers.

The central bank believes that internet connectivity is a critical enabler of financial and economic inclusion as transactions and services increasingly move online.

Banks and other financial service providers will be able to better serve rural areas with more access points that rely on internet connectivity.

In combination with the rollout of the Philippine National Identification System and its electronic know-your-customer facility, greater internet access will allow more unbanked rural clients and low-income communities to use digital financial services and meaningfully benefit from digital innovations.