A top executive of Fiserv, a global financial services technology firm, is optimistic about the further digitalization of the local banking system due to a supportive regulatory environment.
Marc Mathenz, SVP and Managing Director for Asia Pacific, said the Philippines and other emerging markets “have all the right ingredients in place to become more digitized and a lot more inclusive when it comes to financial services.”
He, however, said the whole picture is not yet complete because some parts are still missing. “There’s definitely still a few components that need to come together for it to really take off to the level where it is in some of the other countries in Southeast Asia,” Mathenz told the Philippine News Agency (PNA) on Wednesday.
Although the Philippines is still not at par with other countries in the region, he said it is not far behind. “The Philippines is hitting an inflection point where digital banking and financial inclusion and the ease of payments transfers are really about to take off,” he said.
The Bangko Sentral ng Pilipinas’ (BSP) program to increase electronic payments (e-payments) is among the factors that boost the country’s bid to tap technological innovations to include more people in the formal banking system, he said.
Mathenz, on the other hand, said bids for electronic payments, among others, are hampered by the internet connection speed in the country, which is among the slowest in the region. This is why the government’s move to allow the entry of a third telecommunication company is very important, he added.
Aside from the bid to tap technological innovation, Mathenz said the people’s willingness to adapt to changes is a crucial factor for the country’s financial system to reach higher levels.
Citing government data, the Fiserv executive said only about 28 percent of adult Filipinos have bank accounts and some 60 percent of the unbanked do not consider having a bank account important because they do not have enough funds. “So one needs to convince and educate the wider population that there’s actually a value in having a banking relationship and holding a bank account,” he said.
Mathenz added that these issues can be addressed partly by technology, through the offering of lending products, which in turn, is more attractive to the average citizen.
He said about 47 percent of the total population borrow money but only about 4.4 percent of the borrowers tap the formal sector.
He added that only about 18 percent of those who have bank accounts use digital banking. “So there’s definitely a role to be played by the banks, the regulators, and the financial industry in general to convince the citizens that there is value in having a banking relationship, having a bank account,” he added.