BPI microfinance arm taps IFC for digitalization financial inclusion

MANILA, Philippines — The microfinance arm of Ayala-led Bank of the Philippine Islands (BPI) has partnered with the World Bank’s International Finance Corp. (IFC) to further improve and expand products and services to small entrepreneurs.

BPI Direct BanKo president Jerome Minglana said the memorandum of agreement (MOA) with IFC would help advance the bank’s digitalization and further push financial inclusion in the country.

The partnership between BanKo and IFC aims to identify additional opportunities to help self-employed micro-entrepreneurs (SEMEs) and to implement new products and services in order to bolster the recovery from the impact of the pandemic.

Under the partnership, IFC commits to support BanKo in the development of additional loan products, the digitalization of existing processes and services, and the development of additional credit scorecards.

“We trust that the technical expertise and global experience of IFC will help BanKo develop and implement relevant products and services that will benefit Filipino SEMEs in the short term and in the long run,” Minglana said.

Micro-businesses are a huge contributor to the local economy, accounting for 89 percent of companies and 30 percent of jobs. However, they have been disproportionately impacted by COVID-19 due to factors such as the lack of financing options and a heavy reliance on domestic demand.

He explained the challenges in gaining access to credit for micro-entrepreneurs and in granting credit for lenders like BanKo have been further exacerbated by the COVID-19 pandemic.

“BanKo, instead of being discouraged by the developments, is even more motivated to provide financial products and services to the unbanked and underbanked by innovating and by partnering with IFC, which is also a staunch supporter of micro-entrepreneurs and women in business,” he said.

With the partnership, SEMEs will now be able to gain easier access to a range of products and services, with the added benefit of new digitalized processes.

This is part of a new loan growth strategy for BanKo which is not highly dependent on the expansion of brick and mortar offices.

BanKo is expecting not only to expand its products and services and make these easily accessible to SEMEs to support the micro, small and medium enterprises (MSMEs), but also to develop an improved credit-scoring model by combining BanKo’s expertise with IFC’s global knowledge and experience.

“These innovations and partnerships are expected to foster growth among Filipino SEMEs, reflecting our commitment to supporting the recovery of the MSME market from the pandemic and consequently the nation as a whole,” Minglana said.

BanKo has released over P22 billion in loans over the past four years to help MSMEs. It has served more than 181,000 customers and now has 307 branches since its inception in 2017.