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___________________________________________________________________________
2015/SFOM13/016 Session: 3
Financial Inclusion and Financial Integration
Purpose: Information Submitted by: Philippines
13th Senior Finance Officials’ Meeting Bagac, Philippines
11-12 June 2015
Financial Inclusion and Financial Integration
Pia Bernadette Roman TayagHead, Inclusive Finance Advocacy Staff
Bangko Sentral ng Pilipinas
APEC Senior Finance Officials Meeting11 June 2015
Bagac, Bataan
Gains in Financial Inclusion – Remains a Global, Regional and National Issue
Source: Demirguc-Kunt and Klapper (2012)
700 million adults became account holders20 % decrease in number of unbanked2 Billion adults are unbanked
Adults with an account at a formal
financial institution (%)
0-15
16-30
31-50
51-80
81+
No data
Financial Inclusion Global Milestones
UN Year of Microcredit (2005)
Publication of “Building Inclusive Financial Systems”
G20 Leaders Recognition of the importance of financial inclusion and consumer protection post-crisis 2009
Creation of the G20 Global Partnership for Financial Inclusion (GPFI)(2010)
First Standard Setting Bodies Meeting on Financial Inclusion (2012)
Maya Declaration (2011)
40 countries have set tangible financial inclusion commitments
World Bank Survey (2011)
90% of the 142 countries have some financial inclusion agenda
APEC Financial Inclusion Working Group (2011)
National Strategy for Financial Inclusion
Coordination
Trust building
Raising awareness
and understanding
Toward a common vision and clearly defined inclusive financial
system
• A financial system that is accessible and responsive to
the needs of the entire population toward a broad based and inclusive growth.
• This financial system also serves the traditionally
unserved or marginalized sectors of the population.
• This vision should be guided by a focus on the client.
Vision/ Goal
Empowered clients
Access
Quality
Welfare
Usage
The overall vision is a financial system that is accessible and responsive to the needs of the entire population toward a broad based and inclusive growth. In particular, to ensure that this financial
system also serves the traditionally unserved or marginalized sectors of the population. This vision should be
guided by a focus on the client.
NSFI Strategy Map
POLICY, REGULATION & SUPERVISION
FINANCIAL EDUCATION &
CONSUMER PROTECTION
ADVOCACY PROGRAMS
DATA AND MEASUREMENT
Financial inclusion towards broad-based and inclusive growth
What is financial inclusion?
• A state wherein there is effective access to a wide range of financial services for all Filipinos
Unserved and Underserved
•MSMEs
•Low income population
•Population in frontier areas
•Population unserved due to religious barriers
•Farmers, fisherfolk, agrarian reform beneficiaries
Financial Inclusion Toward Inclusive Growth
Household Level
•Allows HH to seize opportunities and manage shocks•Increase in output and productivity
•Able to mobilize broad based savings and invest in growth of productive sector•Deep and diversified financial system contributes to financial stability
EconomyFinancial System
•Economic Growth
•Reduced Inequality
•Broad based share in economic benefits
Oth
er Facto
rs
Oth
er Facto
rs
“A regionally responsive, development-oriented and inclusivefinancial system which provides for the evolving needs of its diverse
public” and supports inclusive growth (Philippine Development Plan 2011-2016)
Financial integration can boost the positive effects of financial inclusion at each level.
Access to markets, value chains by small enterprises Access to a
broader range of financial services
Shared financial service infrastructure – credit bureaus, registries
Initiatives for Financial Inclusion
Policy and Regulation
Financial Education and Consumer Protection
Advocacy
Enhanced Internal Capacity and Comprehensive Data Framework
Government acknowledge importance of financial incision in overall financial sector development
Private sector recognize potential in unserved and underserved areas
Enabling Policy and Regulatory Environment consistent with International Standards
Key Policies and Regulatory Issuances
Widened range of productsMicrodeposit
Microenterprise loanMicrofinance plus
Micro-agri loanHousing microfinance
Microinsurance
Expanded virtual reachE-money issuers
E-money network service providersTechnology-driven business models
Expanded physical networkLiberalized bank branchingMicro banking offices
Liberalized customer on-boardingUpdated anti-money laundering rules
Outsourcing rules
Enhanced consumer protection frameworkRevised rules for Truth in Lending Act
Market conduct regulationConsumer assistance mechanism
Tangible Gains
176 banks with MF operations serving more than 1.2 million clients with loans outstanding amounting to PHP 11.4 billion (USD 255 million)
• 71 banks with 2 million microdepositaccounts
• 39 banks distributing microinsurancecovering 19 million individuals*
* Highest microinsruance coverage among nine Asian countries, Munich Re Foundation
Access – Electronic Money Ecosystems
Products
Growth in account holders that are not yet necessarily banked
The Philippines ranked consistently has number one for policy and regulation for microfinance for five years in a row.
The Philippines was number one in Asia and top 3 in the world in terms of conducive environments for financial inclusion.
Philippine Country Context - Access
37%
of the 1,634 cities and municipalities do not have a banking office
archipelagic barriers pose a big challenge to financial access
*All figures are as of end-Dec 2012
15%of total population lived in unbanked cities and municipalities
For every 10,000 adults,
1 bank
2 ATMs
With at least one banking officeUnbanked
92%
5%
72%Eastern Visayas
ARMM
CAR
NCR
66%
0%
7%
CALABARZON
Central Luzon
% of unbanked cities and municipalities
Philippines1,634 municipalities92 million Filipinos
With 9,375 banking offices,37% of the cities and municipalities
(15% of the population)are unbanked
With the addition of over40,000 access points
(offsite ATMs, NBFIs, credit cooperatives, pawnshops, money changers, remittance agents,
e-money agents)only 13% of the cities and municipalities
(4% of the population)remain unserved
• Credit Surety Fund facilitating access to credit by the SMEs• 37 CSFs established in 27 provinces and 10 cities nationwide
• Cumulative loans approved reached PhP 1.5 Billion
• Kiddie Savings Program• 12 banks are participating in the program
• Awards programs highlighting excellent microentrepreneurs• Citi Microentrepreneurship Awards recognized 100 awardees since 2002
• BSP Stakeholders Awards inculding financial inclusion partners and champions
• BSP Economic and Financial Learning Program with carefully targeted audiences and key messages• 88% of provinces (71 or 81) have been reached covering more than 300,000
persons
• Approval of a Consumer Protection Framework
Tangible Gains – Financial Education, Consumer Protection and Advocacy
Nationwide Baseline Survey on Financial InclusionPreliminary Results
43% of Filipino adults save money, but 68% of them save at home
43%
32%
25%
RESPONDENT PUTS ASIDE ANY MONEY TO SAVE
Yes Before but not now No
32.7
0.8
7.5
2.6
68.3
BANK
NSSLA
COOP
GROUP SAVINGS
AT HOME
Financial institution used when saving money
47% of Filipino adults borrow money; 62% borrow from family
members, relatives and friends
47%
34%
19%
RESPONDENT BORROWS MONEY
Yes Before but not now No 61.9
12.0
10.5
10.1
9.9
6.1
4.4
2.4
1.1
0.7
FAMILY, RELATIVES AND FRIENDS
LENDING INVESTOR
COOPERATIVE
INFORMAL LENDERS
MICROFINANCE NGO
GOVERNMENT ENTITIES
BANK
FROM AN EMPLOYER
PAWNSHOP
INFORMAL SAVINGS
Financial institution used when saving money
Nationwide Baseline Survey on Financial InclusionPreliminary Results
49.2
48.4
4.1
18.4
23.5
23.2
51.6
43.9
58.6
26.7
71.0
29.3
Bank
ATM
NSSLA
Cooperative
Microfinance NGO
Lending investor/ Financing company
Pawnshop
Money changer
Remittance agent
E-money agent
Payment center
Insurance agent
Has experience in transacting with the access point
55.7
81.1
61.8
34.3
56.7
42.4
37.5
39.9
22.3
30.5
58.3
26.0
41.5
23.2
Check account balance
Pay bills (e.g., electricity, water)
Remit money (send/ receive)
Money transfer between bank accounts
Cash withdrawal
Depositing or cash in
Loan application
Loan approval
Apply for credit card/s
Cash advance against credit card
Pay loan dues or amortization
Insurance application
Paying insurance premium
Foreign exchange
Financial transactions in the past 6 months
Many Filipino adults have
experienced transacting with
payment centers, remittance
agents and pawnshops
Most common transactions are
payments (bills, loans) and
remittance
Nationwide Baseline Survey on Financial InclusionPreliminary Results
86% of Filipino adults believe that access to financial services is important
88% stated that access to financial services is beneficial to their family.
97.1
97.3
77.1
84.3
90.4
92
89.6
90.9
KEEPING MONEY ASIDE FOR A PURPOSE IS IMPORTANT FOR ME.
KEEPING MONEY ASIDE FOR A PURPOSE IS BENEFICIAL FOR MY FAMILY.
TO BE ABLE TO BORROW MONEY IS IMPORTANT TO ME.
TO BE ABLE TO BORROW MONEY IS BENEFICIAL FOR MY FAMILY.
TO BE ABLE TO SEND AND RECEIVE MONEY/PAYMENT IS IMPORTANT TO ME.
TO BE ABLE TO SEND AND RECEIVE MONEY/PAYMENT IS BENEFICIAL TO MY FAMILY.
INSURANCE IS IMPORTANT TO ME.
INSURANCE BENEFITS MY FAMILY.
Nationwide Baseline Survey on Financial InclusionPreliminary Results
National Retail Payment System
• Only 1% of payment transactions are electronic
• Current model is inefficient and costly (e.g., interoperabilityis limited, high cost of sending money)
National Retail Payment System
• Core of the work is in the creation of a national clearing mechanism for domestic retail payment
• The Goal is to create an efficient and inclusive retail payment system
Financial integration can boost the positive effects of financial inclusion at each level.
Access to markets, value chains by small enterprises Access to a
broader range of financial services
Shared financial service infrastructure – credit bureaus, registries
www.bsp.gov.ph
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