The opening of “low-cost, no-frills” bank accounts in the Philippines has risen substantially with the help of the central bank’s aggressive campaign to draw more Filipinos into the formal financial system, according to the agency.
In a statement, the Bangko Sentral ng Pilipinas’ said that the number of basic deposit accounts in the first quarter of 2021 TITLEsurged by 51 percent to 7 million from 4.6 million in the same period last year.
As of this period, 132 banks offer these simplified bank accounts, with total deposits amounting to P4.8 billion. This marks an increase from the 121 banks with total basic account deposits of P4 billion in the first three months of 2020.
The central bank said this increase can be attributed to its call for banks to promote use of these bank accounts — which feature initial deposit requirements of no more than P100 — to foster financial inclusion.
The BSP introduced this simplified framework in 2018 to encourage more Filipinos to open bank accounts. On top of the low initial deposit requirement, they also have simplified identification requirements for account opening, and have no maintaining balance levels or dormancy charges.
“Account ownership enables Filipinos to conduct financial transactions in a safe, convenient, and affordable manner,” BSP Governor Benjamin Diokno said. “It is also a gateway to financial products and services like savings, loans, investments and insurance.”
According to the 2019 BSP Financial Inclusion Survey, only 29 percent or 20.9 million adults have bank accounts. The survey respondents indicated that the top three considerations when opening an account include the initial deposit, interest rate and the maintaining balance.
Next to not having enough money, the survey revealed that the second top reason for not owning an account is the perceived lack of need.
To address the issue, the BSP, in collaboration with different sectors, has been continuously building compelling use cases of transaction accounts. These include the use of an account to receive wages, benefits and financial assistance from the government, fund transfers and day-to-day payment transactions.
Another major reason for remaining “unbanked” is the lack of a valid identification document, an issue that the Philippine Identification System seeks to address. To optimize the registration mobilization for this national ID system, the Land Bank of the Philippines has partnered with the Philippine Statistics Authority to enable unbanked registrants to open an account at registration centers.
To date, 5.9 million previously unbanked Filipinos have opened an account under this arrangement.