BSP urges more financial inclusion

MANILA, Philippines - An enabling regulatory environment is essential to allow new solutions and business models to extend financial services to the unbanked and underbanked, the Bangko Sentral ng Pilipinas said.

BSP Governor Amando M. Tetangco, Jr., in a speech delivered before the Institute of International Finance conference held in Australia last week, said new business models are needed to address the needs of the unbanked and underbanked.

Financial inclusion is one of the main advocacies of the BSP. In 2012, a central bank survey showed only two out of 10 Filipinos had bank accounts.

He noted that microfinance institutions and more recenlty, mobile operators, have introduced new products and extend financial services to the unbanked.

“These solutions can only flourish within an enabling policy and regulatory environment that allows innovation and new ideas to thrive rather than stifle them,” Tetangco said.

“There is a need for policymakers and regulators to fully understand the new business models to be able to provide the appropriate and proportionate guidance,” he added.

The central bank has crafted its policies on microfinance and mobile money with this approach, Tetangco stressed.

For microfinance, he said, the BSP’s approach has been to mainstream the practices in the banking system.

The mobile financial services framework, meanwhile, involved the creation of an electronic money ecosystem. This allowed for an efficient retail payment system such as the government conditional cash transfers.

“Indeed, progress has been made in financial inclusion. The challenge now is to continue to take the agenda forward by leveraging on strategic partnerships and linkages,” Tetangco said.

There is a need for an alignment of policies between agencies and institutions to ensure a coordinated approach in enabling new solutions. Tetangco added there is a need for countries to share experiences in order to pave way for policy development.

He also said engaging with global bodies will better “promote a cohesive and consistent financial inclusion global framework.”

“At the end of the day, we are starting to see more people participate in the financial system. With this access to finance, households are better able to manage their finances, guard against shocks and take advantage of economic opportunities,” Tetangco said.

“The financial system is able to mobilize broader-based savings and channel such funds to productive activities. These can contribute not only to financial resiliency and stability but also to inclusive growth,” he continued.