SECTOR REPORT: CASH MANAGEMENT
Large corporates are pushing their partners to adopt digital cash management and banking services (Photo Source: Wikimedia Commons)
How cash management services in the Philippines thrived through the crisis COVID-19 has pushed small businesses and reluctant clients to take up digital banking channels.
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ore than 99.5% of the total businesses in the Philippines are micro, small, and medium enterprises (MSMEs), according to the latest data from the country’s Department of Trade and Industry. That means that only 4,700 companies are considered large enterprises from the over 1 million businesses that existed in the country in 2019. This predominance of smaller businesses, coupled with digital infrastructures being vastly different between metro areas and provinces and continued strong preference for physical transactions, has meant that cash management services (CMS) remain rare in the Philippines. This spells trouble for a country whose financial regulator has set an ambitious target on banks to have 50% of their transactions on 26 ASIAN BANKING AND FINANCE | JUNE 2021
electronic mediums by 2023— even for the country’s biggest banks, where many of their clients still prefer to pay and transact via physical means. Even those small businesses that have CMS have owners who prefer to go to bank branches as they still distrust digital processes, according to Carlo Nazareno, senior vice president and head of cash management at BDO Unibank. Nazareno describes the CMS scene in the Philippines as “a good mix of electronic cash management services, in addition to physical (currency)”. “In certain areas in the Philippines, where we may not have a very good infrastructure in terms of technology such as internet access or even mobile access, the need for physical branch presence still plays a major part,” Nazareno told Asian
Of the more than 1 million businesses in 2019, only 4,700 were considered “large” enterprises
Banking & Finance in an exclusive interview last month. He added that even at places where BDO has no branches, the bank still collects money through still physical brick-and-mortar alternatives like pawn shops or even money transfer bureaus. Another reason why MSMEs have failed to incorporate CMS before has been simply because up until recently they were not the target of banks, says John Carry Ong, executive vice president for the Transaction Banking Group within Security Bank. Ong notes that the low adoption of CMS in MSMEs isn’t because they have traditionally resisted online platforms, as commonly thought — but because banks have mainly targeted large and medium sized companies for cash management services. “The reason is clear – due to
