Measuring Financial Health in the Philippines
Delivered at the Singapore FinTech Festival, a panel discussion highlighted the strides made by the Philippines in advancing financial health within its financial sector, shifting focus from inclusion to resilience and well-being.
Key Highlights
1. Financial Health as a National Priority
- Central Bank of the Philippines (BSP):
- Initially focused on financial inclusion to address a 29% inclusion rate pre-pandemic, now at 56%.
- Updated the National Strategy for Financial Inclusion to prioritise resilience, recognizing vulnerabilities such as lack of savings, insurance, and exposure to climate change risks.
- Financial resilience is now central to the BSP's vision of fostering long-term financial health.
2. The Role of Digital Banking
- Maya Bank's Contributions:
- Addressing critical gaps: Two-thirds of Filipinos lack savings accounts; only 1 in 10 micro-SMEs have access to credit.
- Addressing critical gaps: Two-thirds of Filipinos lack savings accounts; only 1 in 10 micro-SMEs have access to credit.
- Achievements:
- Acquired close to 5 million customers within two years.
- Mobilised over $500 million in deposits and disbursed $1.5 billion in loans.
- Key innovations: Goal-based savings products that doubled customer savings within six months.
- Advocacy: Leveraged BSP's digital bank framework to expand access and improve financial health for 120 million Filipinos.
3. Measuring Financial Health
- BSP Financial Health Survey:
- Developed a financial health index with 10 questions covering day-to-day needs, rainy-day readiness, financial goals, and confidence.
- Results: A baseline financial health score of 58/100 for Filipinos, comparable to Brazil (57).
- Key insights:
- Lower-income populations, rural communities, youth, and farmers scored below the national average.
- Resilience was the most challenging dimension, with lower-income groups borrowing to meet daily needs, increasing the risk of over-indebtedness.
- Maya Bank's Measurement Efforts:
- Collaborated with BSP and other digital banks to adopt a financial health index, surveying 1,500 respondents.
- Findings:
- While access to digital financial services is high, 65% feel financially insecure.
- One-third of respondents struggle with basic needs and planning for the future.
- Actionable insights: Maya Bank aims to address these gaps by designing solutions that target pain points and improve financial well-being.
4. Scaling Financial Health Innovations
- FinTech Alliances and Standards:
- Global collaboration led by FinTech Alliance Philippines and Asia FinTech Alliance aims to standardise financial health metrics across markets.
- Focus areas:
- Expanding digital payments adoption beyond 50% of transactions.
- Increasing financial service access to 70% of Filipino adults.
- Promoting cross-market learnings to replicate success stories globally.
- Vision for the Future
Vision for the Future
- Collaboration and Impact:
- The Philippines’ financial sector aims to leverage surveys and insights to develop targeted solutions for underserved segments.
- Sharing learnings across markets and scaling financial health metrics will set a global standard for innovation.
Conclusion
The discussion underscored the critical need for financial health as a complement to financial inclusion, with measurement and collaboration being essential to addressing systemic challenges. With regulators and providers driving innovation, the Philippines is poised to become a model for global financial health transformation.
Watch Full Session
Speakers:
- Angelo Madrid, President, Maya Bank
- Lito Villanueva, Chairman, Fintech Alliance Philippines, Chief Innovation & Inclusion Officer and EVP, RCBC, Asia Fintech Alliance
- Mynard Mojica, Director, Financial Inclusion Office, BSP
Moderator:
- Sophie Sirtaine, Chief Executive Officer, Consultative Group to Assist the Poor (CGAP)