Philippines ranks 2nd in Asia in financial inclusion

CEBU, Philippines — The Philippines remains among the global leaders in financial inclusion, according to the Global Microscope 2020 of the Economist Intelligence Unit (EIU), the research arm of The Economist Group.

The country ranks 2nd in Asia, next to India, and 8th worldwide, tied with Brazil, in the EIU study, which assessed the financial inclusion environment in 55 countries.

The EIU study rated countries across five (5) dimensions: 1) Government and Policy; 2) Stability and Integrity; 3) Products and Outlets; 4) Consumer Protection; and 5) Infrastructure.

Together with Thailand and Russia, the Philippines posted the highest improvement in Asia and Eastern Europe, in view of the government’s push to promote digital channels as part of its responses to the COVID-19 pandemic.

The report revealed that the Philippines improved most remarkably and got a perfect score of 100 points in Products and Outlets dimension, which covers Bangko Sentral ng Pilipinas (BSP) regulations on e-money, simplified accounts like the Basic Deposit Account (BDA), and financial outlets such as cash agents.

Focusing on the role of financial inclusion in the COVID-19 response, the EIU study recognized the initiatives of the Philippines to mitigate the adverse economic impact of the pandemic.

The report cited the regulatory relief measures of the BSP to ease liquidity constraints in the financial system, restore business confidence, and sustain the flow of credit amid this unprecedented health crisis. These include the temporary relaxation of compliance to reporting requirements, easier access to rediscounting facility, and waiver of licensing fees and charges for financial institutions setting up their electronic payment and financial services.

It also cited the initiative of financial service providers to suspend fees for electronic fund transfers during the community quarantine period.

During the recently virtual World Fintech Festival (WFF) held on December 7-11,  BSP Director Mel Plabasan, said its Digital Transformation Roadmap, which was recently introduced, ushers in a whole-of-society approach to democratize financial services, initially targeting to shift 50 percent of retail payment to a digital form, and 70 percent of Filipino adults to have access to their own transaction accounts.

The BSP’s implementation of National Retail Payment System framework four years ago also paved the way for the accelerated growth of digital payment in the Philippines.

BSP’s National Retail Payment System framework, aims to increase electronic transactions exponentially at least in five years.

The Global Microscope is an annual cross-country assessment of the enabling environment for financial inclusion. Since 2009, the Philippines consistently belongs to the top-ranked countries in terms of having a supportive framework for inclusive finance.