INTERVIEW: BANGKO SENTRAL NG PILIPINAS
PH’s financial digitisation ambitions: BSP
The launch of the national ID and QR payment system can push up financial inclusion.
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he Philippines has less than two years to achieve its goals of getting 70% of Filipinos banked by 2023 and of having 50% of its financial transactions done digitally. But as of 2020, one in seven Filipinos remain unbanked, according to the Federal Reserve Bank of San Francisco. Despite the odds, the local regulator, Bangko Sentral ng Pilipinas (BSP), is optimistic that they will achieve their goal. “It is indeed daunting, but not impossible. We are optimistic of achieving that coverage of financially included adults in the Philippines,” BSP Deputy Governor Mamerto Tangonan, one of the four deputy governours of the BSP and head of the Payments and Currency Management Sector, told Asian Banking & Finance. Two things are driving Tangonan’s optimism: the launch of PhilSys national ID system, which thanks to a partnership with a local lender, Landbank of the Philippines, saw millions of new accounts added to their system; and the rollout of new services over the next months, including “QR Php to M,” a comprehensive QR payment system that should complement the increased uptake of digital financial services, driven by the pandemic. Tangonan knows what he is talking about: he previously served as chief of the United States Agency for International Development (USAID), wherein he led the E-PESO project meant to find ways to boost digital payments in the Philippines. As deputy governor, Tangonan is also in charge of the InstaPay and PESONet clearing houses for digital fund transfers. Asian Banking & Finance spoke to Tangonan to learn more about the state of digitalisation of financial services in the Philippines and BSP’s plans and goals in pushing for the country’s financial inclusion. You have been given the daunting task of getting 70% of Filipinos banked by 2023. How do you plan to achieve this goal? Many of our people who were not able to open transaction accounts were due to lack of documentation. So that is being addressed with our PhilSys’ national ID system, which BSP is very much actively supporting, not only in terms of producing the Phil ID cards but also in mandating our supervisor institutions to rely solely on the Phil ID. Meaning, the presentation of a Phil ID is enough to establish one’s identity. We have also licensed digital banks, and some of the existing banks have also converted to digital banks. Even those that are not yet officially digital banks are offering the opening of accounts in digital, also deposit, withdrawal, and funds transfers. 16 ASIAN BANKING AND FINANCE | Q4 2021
Deputy Governor Mamerto Tangonan, Bangko Sentral ng Pilipinas
That will reach many of our population and will attract more people into opening their transaction accounts if they do not have one yet. The BSP also recently issued the open finance framework that would even accelerate the digitisation of financial services. The electronic money issuers collaborate with the fintech and other companies to deliver purpose-built digital payments applications and services to the people. We are excited about all these. I think all these factors working together, we can achieve the 70% financial included target by 2023.
The goal of getting 70% of Filipinos banked and 50% of financial transactions done digitally by 2023 is daunting but not impossible
The Philippines also aims for 50% of all retail payment transactions done electronically by 2023. Does the Philippines have the digital infrastructure to support this objective? Yes, we do—and it is being even strengthened and reinforced. First of all, you are right, we have a 50% target in the share of digital payments out of total payments transaction volume in the Philippines. To address and achieve this goal, we have the digital payments transformation roadmap, where, amongst other things, we have identified large volume payments streams that are still being done predominantly through cash due to the absence of digital payments alternatives.
