Rural banks play an important role in the government’s strategy for financial competitiveness by strengthening rural economies. They serve by offering microinsurance, loans, savings and other banking services to the grassroots of the social class where access to commercial banks seems impossible.
As such, it is important that these services are made readily available and accessible to communities in the countryside–meeting credit and other financial needs of farmers, fisherfolk, cooperatives and merchants.
Some challenges hinder delivery of these services, however.
Out of the 1,600 municipalities of the country, 604 still do not have a bank to attend to their financial services needs. In addition, 8 out of 10 Filipino households do not have bank accounts, a 2013 Bangko Sentral ng Pilipinas survey showed.
But in contrast, ratio of mobile subscriber identity module (SIM) cards to the Philippine population was 114 percent in 2014, international business news wire Bloomberg reported. This is higher than the 95 percent global average.
Further, according to a report from the Internet and Mobile Marketing Association of the Philippines last year, 38 million out of 100 million Filipinos were online.
Thus, mobile phones and the Internet are increasingly seen as pervasive modes for sending money and paying for services. Rural banks have taken advantage of this mobile and online banking enterprise and in the process have changed the game in the banking landscape.
In 2014, the Rural Bankers Association of the Philippines (RBAP), its technical arm Rural Bankers Research and Development Foundation Inc. and global non-profit organization Microfinance Opportunities (MFO) worked together to spearhead the Consumer Education for Branchless Banking (CEBB) trainings in the country.
The CEBB program includes MFO-developed online Course and Toolkit directed at supporting branchless banking providers interested in incorporating Consumer Education as part of their adoption strategies.
With the aid of Toolkit, banks were able to identify challenges that customers face as they familiarize themselves with branchless banking service and have effectively addressed these problems.
In addition to this project, RBAP also assisted member-banks in offering easily accessible financial services to rural folk by providing them technical assistance.
Through Microenterprise Access to Banking Services program or MABS, rural banks were able to offer mobile phone banking services that include Text-A-Payment, Text-A-Deposit and Text-A-Sweldo (salary).
Since its introduction in 2006, mobile banking has helped the rural banking industry process more than P16 billion in mobile money transactions, which involved almost 100 rural banks and their 1,200 branches and other banking offices.
With branchless banking, microfinance institutions were able to serve more clients at a lower cost, enabling these clients to access and manage their accounts more frequently and easily.