Mobile banking has grown tremendously over the last five years, thanks mainly to the efforts of rural banks.
Based on the Philippines report of the Bangko Sentral ng Pilipinas (BSP) to the Regulatory Environments to Promote Financial Inclusion in Developing APEC (Asia-Pacific Economic Cooperation) and Other Regional Economies forum held in Melbourne, Australia in March, over 56 rural banks are now engaged in electronic banking—mostly mobile banking utilizing electronic money or e-money—from totally zero in 2005.
The report, titled “Regulation and Supervision of Innovative Models for Financial Inclusion: The Philippine Experience,” noted that in 2011, there were over 150 million e-money transactions amounting to more than P535 billion. With the way mobile banking has flourished in the country even in rural areas, this figure is expected to have significantly increased two years hence.
As an e-money issuer, local banks as a whole employ more than 12,000 agents. This huge agent network, which is still continuously expanding especially in rural communities, has played a key role in providing the poor basic banking services.
“Technology has the potential to extend outreach of banking services to a large number of bankable but unbanked, especially those in rural and hard to reach areas at lower cost and higher efficiency,” the BSP report said.
“The mobile phone industry in the Philippines serves all income groups, especially low income groups,” it added.
Also contributing to the success of mobile banking in the Philippines is the high subscriber penetration rate of mobile carriers, with over 90 percent of the population reached, and the large volume of text messages sent daily, with more than 1.5 billion “texts” sent every day.
The rural banking sector, through the Rural Bankers Association of the Philippines (RBAP), has been engaging in various private sector partnerships to strengthen the range of financial services offered to micro and small and medium enterprises, and other rural clients in the countryside.
Besides partnerships with Globe Telecom’s G-Xchange Inc. (GXI) and Smart Communications, RBAP has existing programs with third-party ATM service providers such as Encash and Nationlink, to offer ATM products and services.
Developments in the sector are also bolstered by the supportive regulatory environment in the country, spearheaded by the BSP.
The BSP has demonstrated its commitment in supporting the sector through the issuance of various circulars and approvals that have helped expand services offered by rural banks. Among these include expanding micro-agri lending, housing microfinance, the accreditation of microfinance rating agencies, and support to mobile money and mobile phone banking services. Along with the Insurance Commission, the BSP has also allowed rural banks to expand to facilitate the offering of microinsurance services in partnership with insurance companies.
RBAP has existing collaborations with insurance providers AA International, BPI-PhilAm Insurance and its subsidiary Philippine American Life Insurance, CARD Microinsurance Agency, Country Bankers Life Insurance Corp., Malayan Insurance Co., MicroEnsure Philippines, Philippine Prudential Life Insurance Inc., Pioneer Life Insurance and United Coconut Planters Life Assurance Corp. in offering microinsurance services to its clients in rural areas.
Mobile banking was the first step toward enabling the industry in its goal of financial inclusion. Microinsurance is another platform that will realize actual financial inclusion and protection for the poor all over the Philippines.