PHL banking penetration rate among lowest in region2 min read
THE PHILIPPINES’ banking penetration rate was among the lowest in Southeast Asia in 2021, according to McKinsey & Company.
The country had a banking penetration rate of just 56%, based on central bank data, McKinsey said in a May 3 article on its website written by Guillaume de Gantès, senior partner at its Southeast Asia office, Associate Partner Hernan Gerson and Kristine Romano, a partner at its Manila office.
The Bangko Sentral ng Pilipinas (BSP) wants 50% of payments done online and 70% of Filipino adults to have a formal financial account by the end this year.
Latest BSP data showed banked Filipino adults almost doubled to 56% of the population in 2021 from 29% in 2019. The share of digital payments in total retail transactions also increased to 30.3% from 20.1% in 2020.
“The Philippines is one of the fastest-growing economies in Southeast Asia, yet the banking penetration rate ranks among the lowest in the region at 56% versus 96% in Thailand and 88% in Malaysia,” McKinsey said in a separate statement.
“The banking penetration rate remains among the lowest in the region, and traditional financial institutions focus heavily on commercial lending, leaving a rapidly growing, increasingly affluent, and digitally savvy population with little access to financial services that meet their needs,” it said in the article.
Philippine banks are “underinvested” in digital technologies, McKinsey added.
“Traditional banks remain focused on wholesale banking and have been slow to reach new customers outside their existing client base,” it said. “Rural areas are home to nearly half the population, yet rural households are especially underserved, and many have little or no access to brick-and-mortar banking infrastructure.”
Data from McKinsey showed that Philippine banks use less than 10% of their revenues on information technology, lower than the 15% average in the Asia-Pacific region.
Meanwhile, digital channels account for only 5-15% of…
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