Initiatives to increase financial inclusion in the Philippines resulted in a higher share of Filipinos with a formal account in a financial institution. Although the
, the availability of digital banks made it easier for Filipinos to access financial services. The banking industry in the Philippines plays a crucial role in the country’s economy, contributing over a trillion Philippine pesos in 2022. The
, though higher, remained below four percent. The Philippine banking system was expected to continue implementing reforms necessary to satisfy the banking needs of Filipinos while boosting the economy.
Philippine banking system overview
Banks in the Philippines are regulated by the Bangko Sentral ng Pilipinas or the central bank and are classified into universal, commercial, thrift banks, rural, cooperative, and Islamic banks. Universal banks are authorized to provide various services, including investment, commercial, and development banking, mutual funds, and housing loans. Commercial banks, on the other hand, are privately owned institutions that accept deposits and offer checking services. In the Philippines, these kinds of banks are the largest group of financial institutions and the most popular among customers with different financial needs because of their vast financial services. Among the
largest universal and commercial banks in the country in terms of assets were BDO Unibank Inc., Metropolitan Bank and Trust Company, and the Land Bank of the Philippines.
On the other hand, thrift banks comprise savings and mortgage banks and loan associations, which focus on accumulating and investing depositors’ savings. This type of bank also provides short-term to long-term financing. Meanwhile, rural and cooperative banks are authorized to offer essential financial services to rural residents and financial assistance to farmers. Finally, Islamic banks cater to Muslim Filipinos and operate per Islamic laws.
Digital banking driving financial inclusion
Consistent efforts to encourage citizens to open an account at a financial institution resulted in an increased share of Filipinos with a formal account from a financial provider. According to the Philippine Central Bank, about 56 percent of Filipinos are banked based on a financial inclusion survey for 2021. Incremental to this growth was the introduction of digital banking, which allowed the opening of bank accounts that previously required physical presence in a bank branch. As a result,
online banking penetration was forecast to increase in succeeding years gradually. There are currently
six licensed digital banks in the country, led by Maya Bank and UnionDigital Bank.
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