BIS, World Bank release financial inclusion report

MANILA, Philippines - The Bank for International Settlements (BIS) and the World Bank Group have taken serious steps to ensure the sustainability of financial inclusion on the payments aspect.

The BIS is generally acclaimed as the central bank of the central banks worldwide. Tasked to oversee efforts towards the workability of financial inclusion is the Committee on Payments and Market Infrastructures (CPMI).

In fact, the CPMI and the World Bank released a report that examines demand and supply-side factors affecting financial inclusion in the context of payment systems and services, and suggests measures to address these issues.

It states that all individuals and businesses must have access to and be able to use at least one transaction account operated by a regulated payment service provider to: (i) perform most, if not all, of their payment needs; (ii) safely store some value; and (iii) serve as a gateway to other financial services.

Benoît Coeuré, member of the executive board of the European Central Bank (ECB) and CPMI chairman, said the Committee on Payments and Market Infrastructures and the World Bank Group made an important contribution in improving financial inclusion with the release of the report.

“Financial inclusion efforts are beneficial not only for those that have no access to financial services, but also for the national payments infrastructure and, ultimately, the economy,” Coeure said of the joint report.

Gloria M. Grandolini, senior director, Finance and Markets Global Practice of the World Bank Group, comments that the report will help them better understand how payment systems and services promote access to and effective usage of financial services.

“It provides an essential tool to meeting our ambitious goal of universal financial access for working-age adults by 2020,” Grandolini added.

The report outlines seven guiding principles designed to assist countries that want to advance financial inclusion in their markets through payments, these are: (i) commitment from public and private sector organizations; (ii) a robust legal and regulatory framework underpinning financial inclusion; (iii) safe, efficient and widely reachable financial and ICT infrastructures; (iv) transaction accounts and payment product offerings that effectively meet a broad range of transaction needs; (v) availability of a broad network of access points and interoperable access channels; (vi) effective financial literacy efforts; and (vii) the leveraging of large-volume and recurrent payment streams, including remittances, to advance financial inclusion objectives.

In July this year, the Bangko Sentral ng Pilipinas formally launched the National Strategy for Financial Inclusion, which presented broad targets, general strategies, policy, regulations and supervision, implementing mechanism, and frameworks.

The Philippines is considered a thought leader in financial inclusion.

In 2014, it ranked first in Asia and among the top three in terms of having a conducive environment for financial inclusion with its gains in microfinance, mobile financial services, and recently in micro-insurance.

Thirty percent of municipalities are without banking offices. However, the presence of financial service providers reduces the size of the financial vacuum.

Financial service providers include pawnshops, remittance agents, money chargers/foreign exchange dealers, non-stock savings and loan associations, cooperatives, lending companies, financial companies, mutual benefit associations, e-payment service providers, and mobile banking agents.