Citi wants everyone financially included

Citi Philippines recently hosted the first Asia Pacific Financial Inclusion Summit in Manila with over 500 participants from business, government and community stakeholders coming from 35 countries.

Held at Shangri-La Makati, the summit brought together financial educators and microfinance experts to come up with strategies to achieve financial inclusion for everyone — or at least that’s the long-term goal.

“We support the NGOs doing the programs through grants from Citi Foundation,” says Regina Seow, Citi Asia Pacific head for corporate citizenship. “But we believe beyond philanthropy, we don’t just give the money, we work with them to determine the design of the program and share learnings from other countries. The other thing we do is through our employees who have the right expertise to help the NGOs. That’s the strength of Citi and its network.”

 “The summit was a consolidation of the region’s two leading forums — the Citi-FT Financial Education Summit and the Asia Microfinance Forum — to serve as a common platform for better coordination and collaboration among stakeholders seeking to achieve greater financial inclusion in the region,” said Citi Corporate Affairs director Aneth Lim. “The agenda was designed to harness the developments and new opportunities and drive better integration of capability, access and other key elements that can deliver greater impact and scale in inclusive finance.”  

 “According to the World Bank, Asia Pacific still has more 1.2 billion people that are unbanked, or 50 percent. That’s one billion reasons for us to work harder,” says Regina.  “The Philippines is one of the leading countries in terms of financial inclusion but the Bangko Sentral ng Pilipinas says 43 percent still have no bank accounts.” 

Aneth and Regina agree that geography plays a big role in countries with thousands of islands like the Philippines. “Reaching the villages and mountains is still a big issue. So is the mindset of people who are intimidated by banks or institutions. Even just filling out forms can be intimidating for them.”

Regina is hopeful that in these times of globalization and digitalization, the strategies have changed to make access easier.  “The low-income people we are trying to reach now have cellphones. When Citi started supporting financial education in 2002, it was delivered very much in a classroom setting. Even when we went to the villages we’d bring them out and put them in a classroom. Fast forward to now, even people who are low income or slum dwellers have cell phones. Is there a need to do classroom? Maybe not. The second thing that has changed is that now even the microfinance institutions are using the phone for loans. When is the best tie to deliver financial education? Together with the information from microfinance groups, so that it will help them understand and use loans better.”

Aneth cites Citi Philippines’ program in Singapore where they educate overseas Filipino workers in entrepreneurship. “The intention is for them to go home sooner and be with their loved ones as opposed to extending their contracts indefinitely. Sometimes when they come home, the family is not ready to receive them because they’re just used to getting the remittances. So our program is to engage the family and get to think about entrepreneurship and we’re combining that with financial education. Part of it is to tell them to look at investment-related spending. That could be to pay for education or buy a jeep and use it for another income. So we’re giving this education as the money comes to them because sometimes when you educate them and there’s no money, they just say, ‘I never have enough.’”

In his speech, Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr. emphasized the critical role that financial inclusion plays in inclusive growth and poverty alleviation in the country. “We have before us the opportunity to catalyze a quantum leap for financial inclusion in Asia Pacific and the world. I will highlight three elements, which I believe are essential in overcoming challenges and in achieving this quantum leap. First is research and measurement; second is purposeful action and innovation informed by research; and third is convergence of objectives and actions across domestic, regional and international arenas.”

Governor Tetangco also thanked the organizers of the summit for choosing the Philippines to be the site of the inaugural event on financial inclusion, citing the support of the Citi Foundation, the Financial Times and the Foundation for Development Cooperation. The Bangko Sentral ng Pilipinas and the Banking With The Poor Network are also host partners for the Summit.

Aftab Ahmed, CEO for Citi Philippines added, “It is a privilege to host this inaugural summit in Manila, together with the FDC and the Financial Times. It underscores our support of the government’s National Strategy for Financial Inclusion that was launched earlier this year by the Bangko Sentral ng Pilipinas.”

The summit held in-depth discussions around a variety of financial inclusion topics and explored in greater detail how financial inclusion efforts in the region can be scaled up and made more accessible.

Delegates heard from thought leaders and industry experts from organizations including the Asian Development Bank, United Nations Capital Development Fund, Better than Cash Alliance, ACCION, CGAP, Women’s World Banking, BRAC, Grameen Capital India, and MicroSave, as well as regulators from around the region.

Shengman Zhang, Citi Asia Pacific chairman who welcomed delegates to the event, said: “This summit is timely as just a month ago, world leaders adopted the 2030 Agenda for Sustainable Development and financial inclusion is prominently acknowledged as an important enabler of key Sustainable Development goals. While great progress has been made in expanding financial inclusion in Asia Pacific, the inclusive finance ecosystem is evolving rapidly due to globalization, digitization and urbanization. The development and delivery of programs and financial products and services need to be re-evaluated and new opportunities and technologies explored, in the face of these changes.”

“For the Philippines to take a major leap to becoming an economic powerhouse in Asia, there is an urgent need to move those millions of Filipinos into the Financial Inclusion space,” added Aneth. “So what is financial inclusion?  It is something better understood when you look at what it isn’t. Financial exclusion happens when people or business enterprises cannot get necessary financial services that they need. It is greatest among those who live in poverty. Financial exclusion is often the result of many factors such as not having the proper identity records needed to set up a bank account, or the needed funds to open one. It may also be due to being situated too far away from financial institutions, or simply not knowing about the existence of these financial services. Whatever the reason, financial exclusion can affect individuals, enterprises, and the country in a negative way.

“What does it mean for a person to be financially excluded? For starters, it means that the excluded person will have nowhere safe to store his cash, stuffing bills somewhere inside his closet, beneath his pillow, or entrusting these to someone else will have to suffice. When he needs additional money because of an emergency, or to avail of basic services such as to go to school or pay for electricity or water, he has nowhere to borrow money from, and will either have to borrow from friends and relatives, or even loan sharks who charge exorbitant interest rates. Worse, he might even have to beg. When someone sends him money, he will have to travel long distances to get those funds, or rely on someone else to bring it to him, hopefully intact. The financially excluded person will not be able to prepare for his future needs, and will not be able to take part in opportunities for growth that may come along.”

Aneth says you don’t have to look far to see these excluded people — your kasambahays, street vendors, bus or taxi drivers “or even your grandparents who never had a bank account. For business enterprises, being financially excluded means not being able to make businesses grow much faster or much bigger. The expansion will have to be funded out of one’s own earnings, and there may be times when one is unable to purchase needed materials for their needs, or pay for services essential to their business. It may also mean not being able to pay people who work for one’s business on time. When there are opportunities for the business to serve new products, they may not have the money to do so. In other words, it will most likely stay small or micro for a long time.  Having access to financial services and using them correctly helps people and small enterprises generate income, take advantage of opportunities, and protect themselves in times of crisis, which will help them work their way out of poverty.”

She says that while financial inclusion alone cannot pull people out of poverty, “it does empower them; it also creates a strong base for the Philippine economy. It accelerates economic growth by allowing individuals to put up business, and allowing enterprises to expand, and, in the process, creating jobs.”