On September 25, 2019, I was invited to moderate a roundtable discussion and one of the panelists was from the Bangko Sentral ng Pilipinas. She explained various strategies of the BSP towards financial inclusion.
Here’s the exerpt.
Cathy Yang: Now, let’s move on to the first of the three roundtable discussions starting with a full range of real customer issues from the lack of financial awareness to predatory lending.
Please welcome our moderator, Mr. Vince Rapisura, the President and founder of SEDPI, the Social Enterprise Development Partnerships, Inc., the Philippine’s premier capacity builder in the fields of microfinance, social entrepreneurship and financial literacy. Vince, all yours.
Vince Rapisura: Thank you, Cathy. Good morning everyone and welcome to Finovation’f first round table discussion entitled, “From RejectED to AcceptED: Consumer Insights.” My name is Vince Rapisura and I’ll be your moderator.
But before we move into the panel discussion, eCompareMo actually prepared a video for us to set the tone for the discussion. So, let’s watch this.
Insert video here:
That video reflects the challenges typical Filipinos experience on the ground. I am happy to introduce our distinguished panel who will join me in a meaningful conversation about challenges and obstacles facing financially underserved Filipinos.
Joining me in our roundtable discussion entitled “From #Rejected to #AcceptED: Consumer Insights” is the Managing Director of the Center for Learning and Inclusion Advocacy of the BSP, Ms. Pia Bernadette Tayag.
The Head of Cards of the Asia United Bank, Mags Vazquez-Surtida is also with us. Let us welcome Mr. Harvey Libarnes, Financial service head of Smart Communications; and the General Manager of Cashalo, Mr. Hamilton Angluben.
Of course, seated with us is the co-founder and CEO of eCompareMo, Ms. Stephanie Chung. Good morning and welcome to our roundtable discussion.
Before we start our exciting conversation today, eCompareMo prepared a video for us to set the tone for the discussion. Let’s all watch this.
We just saw three interesting cases about the challenges in accessing financial services. One is a telemarketer and aspiring photographer, let’s call him Alvin, who got declined for a loan because of his “unstable” employment as a telemarketer.
The other case, let’s call her “Cristina,” is a compulsive buyer who fell prey to predatory loans online. Lastly, we have Aling Hedy and Mang Dado who would like to grow their sari-sari store but got declined in their bank loan application.
The common denominator of the case studies presented is access to loans. But when we talk about financial inclusion, do we only mean credit or loans? Let’s ask Pia from the BSP. What is the official definition of financial inclusion?
Pia Tayag: I think the governor presented how we are approaching this innovation to not just promote financial inclusion but really the efficiency of the financial system in general. To your question on financial inclusion, you are right, we have an official definition. This is also accepted by our national strategy for financial inclusion.
It’s effective access to a broad range of financial services by all. Here, I really emphasize – effective, access – because these just just not require having a bank there having a service provider there but people actually go there and access their services and use it for their benefit.
Having a loan but if doesn’t really improve or address your financial objectives then that’s not what we call effective access. And it’s by all, all segments – the economy as well as the individual. It’s quite a big objective.
Vince Rapisura: The BSP laid out a national strategy for financial inclusion. Can you share to us the four key areas of the strategy map for a more inclusive financial system?
Pia Tayag: As for the Bangko Sentral, our objective is really to promote and enabling policy and regulatory environment. I’d like to show you some tangible results and benefits of this. First of all, the approach of the BSP to be open to innovations in the market is key.
There are some regulators that if it looks different than what we are used to or what we are comfortable with will immediately say, sorry we cannot do that. But with the Banko Sentral, the test and learn as discussed was started way back in the 2000s when the first mobile money operators were here. So that kind of thinking that the market really develops new things and regulators must keep pace, that kind of attitude is what is also supporting innovation.
Apart from that openness, we are also looking at things that could catalyze innovation. To highlight three things in the digital space that we’ve put forward that address some of the barriers why some of these innovations cannot take place.
First of all, we issued a circular fairly recently – the basic deposit account. This addresses the main barrier why people don’t access basic savings account – the fees, the proximity to the bank, the documentary requirements.
So we said, ok a basic deposit account is something that has no dormancy; PhP100 and below to open; and no other charges. For the banks this might be too costly and so we said, an exemption on the reserve requirement.
So they have an account but then they can’t go to the bank. So we’ve actually also issued regulations in the last two years cash agents, allowing the banks to use third parties – pharmacies, small groceries – to act in behalf of the banks, to open accounts to service these accounts.
The National Retail Payment System, we want the people to see the value of an account. So while 9 out of 10 Filipinos make payments and so it’s a need that they do. So if you can do that through your account enabled through an interoperable retail payment system, then you have the incentive to open that account.
So these are the examples of regulations that we’ve put in place for the market to develop solutions around this. To address the very barriers of financial inclusion. So that’s one aspect – the enabling environment, the proactive policies.
The next one is that innovations won’t take off without trust and certainty from the public. Our two-pronged approach here is ensuring a consumer protection framework to make sure that the customers know what products they’re accessing and also a financial education component. To make sure that they benefit from the financial services that they access.
Vince Rapisura: Ok, thank you very much!
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