The Philippines’ digital banking landscape is making a bold commitment to empower Filipinos and improve their financial well-being. The Digital Bank Association of the Philippines (DiBA PH) recently pledged to drive financial health initiatives alongside the Bangko Sentral ng Pilipinas (BSP) during a key roundtable discussion with Her Majesty Queen Máxima of the Netherlands, the United Nations Secretary-General’s Special Advocate for Inclusive Finance for Development (UNSGSA).
This high-profile meeting, hosted by DiBA PH and Maya Bank, aimed to foster collaboration between the six licensed digital banks and the BSP. Discussions focused on exploring avenues for joint efforts in advancing financial health initiatives and establishing clear metrics for measuring progress.
Angelo Madrid, President of both DiBA PH and Maya Bank, highlighted the crucial role digital banks play in boosting financial health: “Millions of Filipinos now own a financial account thanks to e-wallets. The next big challenge is here, and in less than two years of operations, safe and reliable digital banking is proving that we can help Filipinos use their financial accounts to improve their financial health. We are committed to providing better experiences, safety, and privacy through digital technologies.”
The UNSGSA defines financial health as a person or family’s ability to manage current financial obligations, absorb financial shocks, plan for future goals, and feel confident about their financial security.
“Enhancing the financial health of our customers is intrinsic to digital banking, and we are dedicated to advancing this agenda. In the short term, we support conducting a national survey and developing complementary internal metrics to measure our impact on the financial health of our customers. Beyond that, we continue to deliver groundbreaking innovations that empower Filipinos to make bolder financial choices,” Madrid emphasized.
The roundtable brought together key leaders from the country’s digital banking sector, including representatives from GoTyme Bank, Overseas Filipino Bank, Tonik Digital Bank, UnionDigital Bank, and UNO Digital Bank. Additionally, representatives from the UNSGSA Queen Máxima’s Reference Group, including the World Bank, Better Than Cash Alliance (BTCA), Alliance for Financial Inclusion (AFI), and Consultative Group to Assist the Poor (CGAP), participated in the discussions. Co-leading the conversation was Deputy Governor Bernadette Romulo-Puyat of the BSP.
DiBA PH’s commitment aligns perfectly with the Philippines’ significant strides towards financial inclusion. The BSP’s 2021 Financial Inclusion Survey revealed a substantial increase in adults with financial accounts — from 29% in 2019 to 56% in 2021 — largely due to the widespread adoption of eWallets.
However, despite this progress, the survey also highlighted areas for improvement. Only 4% of adults utilize bank loans, and over half (52%) keep their savings at home. Furthermore, a significant portion of Filipinos (41%) struggle to meet basic living expenses, and nearly half (46%) lack emergency savings.
Digital banks are actively addressing these challenges by introducing innovative products and services that foster healthy savings habits. Customers benefit from higher interest rates on deposits, encouraging them to save more. In addition, goal-based deposit accounts allow users to start small and gradually build their savings over time.
The digital banking sector’s success is evident; their depositor base grew by a staggering 26% at the end of December 2023, compared to the overall banking system’s modest 4% increase during the same period.
Digital banks are also making significant strides in expanding credit access. They have pioneered alternative credit scoring models and introduced responsible credit offerings. While infrastructural challenges like the national ID system rollout and a more comprehensive credit bureau still exist, the total loan portfolio for digital banks saw a notable rise, increasing from PHP25 billion in 2022 to 2023.
The Philippines’ digital banking sector is poised for a future focused on financial health and empowerment. Through collaboration with the BSP and continued innovation, digital banks are well on their way to revolutionizing the financial landscape for Filipinos.