Despite giving rise to unique challenges and upheavals on a global scale, the Covid-19 crisis has widened the path to accelerating financial inclusion.

The pandemic has given new immediacy and put a much-deserved spotlight on the primacy of financial inclusion in the government's crisis containment and recovery efforts. It illustrated financial inclusion's vital role in social welfare and protection, as the transaction account became a necessary means for the country's poorest and most vulnerable to receive cash assistance from the government.

With the imposition of lockdowns and physical distancing measures, consumers and businesses alike shifted to digital payments at an unprecedented speed and scale. All these exigencies demonstrate the importance of an inclusive digital finance ecosystem that the Bangko Sentral ng Pilipinas (BSP) has been deliberately building and shaping in the last few years.

The BSP has put in place the building blocks of an inclusive digital finance ecosystem namely, 1) democratized access to a transaction account; 2) expanded network of low-cost financial touch points; and 3) interoperable digital payments.

However, the BSP recognizes that more work needs to be done to ensure that a much broader population of Filipinos and their enterprises benefit from welfare-enhancing financial services.

The BSP has identified the following key aspects that it considers as the most important for all to know about its financial inclusion efforts.

BSP Governor Benjamin Diokno
BSP Governor Benjamin Diokno


Increasing the number of Filipinos with an account by leveraging on compelling use cases

Account ownership is a basic step toward digital financial Inclusion. While cost concerns and the lack of ID are being addressed by the Basic Deposit Account (BDA) and the Philippine Identification System (PhilSys), respectively, the perceived lack of need for an account remains the top-cited reason for not opening an account by the unbanked.

The BSP thus promotes compelling use cases of a transaction account to improve its perceived utility for a broader group of consumers. These include the use of accounts for receipt of cash transfers (in partnership with the Department of Social Work and Development), wages (in partnership with the Department of Labor and Employment), student allowances, and payments for transportation and merchants, among others. These efforts are reinforced by BSP's digital payment initiatives, such as the the QR Ph,

Enhancing the digital infrastructure to support digital financial inclusion

The BSP is actively involved in the implementation of PhilSys, not only as the partner of Philippine Statistics Authority in the production of the PhilSy ID cards, but also as chairman of the Inter-Agency Committee on Authentication and Use Cases. As a national digital ID platform, PhilSys is envisioned to be a gamechanger for digital financial inclusion.

The BSP also supports efforts to address the digital divide and bridge the Internet infrastructure gap in the country by advocating for ICT policy reforms. As chairman of the Financial Inclusion Steering Committee, it has pushed for the liberalization of access to satellite technology for broadband services and the passage of the Open Access in Data Transmission Bill.

The BSP's agent registry initiative aims to create a web portal of cash/e-money agents that can be used by the BSP, BSP-supervised financial institutions, and the public, in view of the catalytic role of agents in reaching remote areas and transitioning the unbanked from cash to digital transactions.

It also aims to increase awareness and trust in digital financial services through consumer empowerment initiatives such as the Digital Literacy Program and the BSP Online Buddy (chatbot).

Promoting access to finance for the agriculture and MSME sectors

The BSP works on a range of initiatives to create a more sustainable agriculture and MSME financing ecosystem. These initiatives aim to address the challenges that emanate from both the demand-side (farmers and MSMEs) and the supply-side (banks and other financial institutions), as well as the supporting credit infrastructure.

Part of the BSP's institutionalized support to the microenterprises and their cooperatives is the credit surety fund (CSF) program. The BSP's goal is to strengthen the role of the CSF as a catalyst for inclusive economic opportunities in the communities they serve.

The BSP has also launched in partnership with the government of Japan the Credit Risk Database (CRD) project which will provide banks with a robust credit risk assessment tool for small and medium enterprise (SME) borrowers. This will promote risk-based lending to facilitate collateral-free and low-cost credit for well-managed SMEs.The BSP is aware that a deeper understanding of the needs and profile of the country's MSMEs can support well-informed policy interventions and financial product development. Thus, in partnership with the Asian Development Bank, the BSP has launched a national demand-side MSME survey, which is expected be completed before the end of the year.

The BSP is also supporting the conduct of a supply chain finance market development study as part of its efforts to promote supply chain and value chain financing as innovative lending approaches that can benefit the country's MSMEs.

With the aim of addressing the difficulties faced by MSMEs in accessing bank loans, specifically in filling out long and intimidating application forms, the BSP is working with various banking industry associations and the Department of Trade and Industry to introduce a simpler and borrower-friendly standard loan application form. This initiative will be adopted by participating banks as part of their commitment to support small businesses.

Other BSP initiatives to promote MSME and agricultural financing include engagement with Philippine Guarantee Corporation to enhance credit guarantee programs for microfinance institutions and support for the CSF; legislative advocacy support for the Warehouse Receipts Bill; and the conduct of a study on the need to establish a regulatory framework for development financial institutions.