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Furthering Financial Inclusion with Branchless Banking and FinTech Innovations

There are over 7,000 islands in the Philippines alone. Not all of them are inhabited, but there are enough areas and provinces that remain rural to this day. This poses a problem for the people living in these areas because they live far away from infrastructures and establishments that they need to access certain goods and services. The distance makes it harder for them to reach these services because traveling costs time and money, which not everyone can afford. One such service that people living in rural areas might have a hard time accessing is one that financial institutions provide banking customers. These range from basic transactions to more complex ones that ensure people are financially included.

It is not surprising that the majority of the financially excluded live outside urban areas. According to Bangko Sentral ng Pilipinas’ National Baseline Survey on Financial Inclusion (NBSFI), people from urban areas transact with banks more – with 55% of adults coming from urban areas compared the 45% of adults from rural areas. This creates an imbalance in the country because there are more rural than urban areas in the Philippines, leaving those in far-flung areas to have less of a chance to open a bank account with a formal financial institution.


While most Filipinos are aware of banks and have at least a basic understanding of owning a savings account, only 69.8% of those surveyed in the NBSFI think that banks are accessible. According to them, pawnshops and payment centers are the most accessible touchpoints. Up until now, the pawnshop industry outnumbers the combined network of universal, commercial, thrift, rural, and cooperative banks. Pawnshops then are more likely to be found in rural areas compared to banks, resulting in it being more accessible.

As a way to address certain barriers that hinder communities from becoming financially excluded, the Bangko Sentral ng Pilipinas (BSP) has issued circulars that promote financial inclusion in the country. Simply put, financial inclusion means having access to financial products and services that are relevant, appropriately designed, and of good quality. This access can be much harder to provide to people living in rural areas.

Agency Banking

To address the barrier of geographical location, BSP’s circular 940 allows banks to expand their reach through banking agents that can accept and disburse cash on behalf of them. Through these agents, financial products and services can reach people who don’t have physical access to brick-and-mortar branches. These banking agents can also perform Know-Your-Customer procedures for loan applications and opening of bank accounts — procedures that are usually done in-branch.

Aside from these, agency banking can also address financial illiteracy because agents can easily explain to them how their services such as cash in and cash out, balance inquiries, digital loans, and bill payments work, unlike in banks where they might be intimidated to ask the bank staff. Despite the high usage of smartphones and social media in the country, a lot of Filipinos are still hesitant to transition to online banking as they believe it to be more unsafe than keeping physical cash at hand. Better understanding will eventually lead to more people becoming financially included, and that can be done via agency banking.

Even with poor cellular coverage and internet connection in rural areas, agency banking can be done via financial innovations from financial technology companies. One such company is Bank-Genie. BanqIn, a product of Bank-Genie, enables microfinance institutions to reach customers via banking agents even with just a 2G connection. BanqIn’s all-in-one banking platform enables agents to conduct banking transactions on a bank’s behalf without any problems.

Moving Forward


Being financially included isn’t simply having access to financial products and services because there is a deeper level to that. Having access to these services opens up a wide range of opportunities for people, especially low-income households. It’s not just having an account to store money, because financial institutions can offer loans to help the poor have more economic opportunities open up to them -- which can result in improved livelihoods and the chance to invest in their health and education.

In essence, financial inclusion can lift people out of poverty. For a country that has less than 50% of people having bank accounts, agency banking is a step in the direction of financial inclusion.

The BSP is working on furthering financial inclusion in the Philippines. The central bank is eyeing to have 70% of the country’s Filipino adults to be financially included by 2023. Acknowledging what financial technology can do to help further financial inclusion, the BSP introduced a roadmap aimed at increasing digital retail transactions by 50%. With the effects of the pandemic alone, digital banking transactions have surged up ever since the start of the community quarantine. Being the country that has the longest lockdown in the world, digital financial transactions won’t be declining anytime soon.

It would then be wise for financial institutions to invest in branchless banking and agency

banking systems. According to GSMA and the University of Washington, agents can have up to 20 times the reach of bank branches and seven times the reach of ATMs. Aside from improving a bank’s operational efficiencies and processes, BanqIn offers a platform that inherently reduces the costs it takes for a bank to reach a high number of transaction volumes without the traditional banking set up inside branches. Most importantly, an upgrade of remote banking channels will further financial inclusion in the country.

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