Rural banks account for 67% of jobs in banking

The country’s rural banking system has generated roughly 67 percent of net new employment generated in the entire Philippine banking industry at the start of the 21st century.

Rural banks were also responsible for opening 70 percent of the new branches opened from 2003 to 2007.

Rural Bankers Association of the Philippines (RBAP) president Tomas Gomez said that while rural banks had done considerably well in the past four years, the present conditions still offer tremendous opportunities.

“Over the next few years, through the appropriate use of technology, we will be able to do more in line with our mandate as a sector: improving lives of the marginalized and underprivileged, and providing formal access to financial services for the un-served and underserved markets,” Gomez said.

Presently, there are over 200 automated teller machines (ATMs) deployed in over 45 rural banks nationwide in the countryside. In fact, 100 of these were deployed in the last 12 months alone, making it the fastest growing ATM network in the Philippines today.

As of 2007, both loan and deposit portfolios grew at an identical pace of 21.5 percent. Total assets grew at 18 percent. The average capital adequacy ratio (CAR) of the system stood at 15 percent in the same period.

“These are all time highs for the system,” Gomez added.

Aside from the ATM networks, the rural bankers have embraced mobile banking technology with gusto.

In fact, a large number of rural banks are sending a portion of the salaries via mobile phone.

“And we can use our phones to pay for goods and services, transfer money, withdraw and deposit from our bank accounts, or even pay a loan. And tens of thousands more of rural bank employees and clients in the countryside are experiencing the same world-leading service,” the RBAP president added.

This is of course made possible by the rural banks alliances with telecommunications companies like Globe Telecommunications and Smart Communications.

It also involves innovation in credit and service delivery methods like microfinance.  

After the successful implementation the Microenterprise Access to Banking Services (MABS) program and in active partnership with People’s Credit and Finance Corp. (PCFC), the rural banks share of the country’s microfinance market has is now close to 40 percent.

Rural banks today are servicing more than 800,000 active microfinance clients with an outstanding loan portfolio worth P6 billion. Eight out of 10 among the fastest growing rural banks over past 10 years have active microfinance operations.

Gomez said that key initiatives, together with our institutional and regulatory partners, are in the pipeline.

These initiatives are: the MABS 4 which includes housing microfinance, mobile phone banking, micro-agri, microinsurance; a multi-year program with SB corp. for capacity building in the area of risk-based lending to improve the SME sector’s access to finance; a technical working group with the BSP formed to reduce regulatory burden; and another technical working group with the BSP on Access to Technology.