In 2017, around 35% of Filipinos had bank accounts. In a country with a population of over 100 Million people, this means that over 60 Million people do not have bank accounts. Reducing this figure is a key goal of the Bangko Sentral ng Pilipinas (BSP), who say that by 2023 they aim to have over 70% of the population banked and by 2025 they aim for over 80% of the population. That is clearly a huge jump so the question of why people do not have bank accounts now needs to be addressed.
There are some key factors in deciding to open a bank account, and these factors are also key to understanding why so many people do not go to the effort and expense of opening an account.
Bank accounts require a minimum holding balance
Many bank accounts require between 2,000 pesos and 10,000 pesos to be deposited and to remain untouched and unused for the lifetime of having the account. If the account drops below that holding balance level, charges and fees can be added by the bank, meaning that not having enough money in the account can lead to actually losing money in the long term. Banks are there to protect our money, not to cost us money. So people on limited means can not afford to open a bank account, and can not risk losing money when the bank account is open.
2. Branches are localised in cities and can often by several miles away
People who live in the Provinces, working in agricultural jobs often need to travel long distances to get to their nearest branch. This travel can be expensive, and time consuming. Why would someone choose to travel over an hour to check their balance, or to withdraw a small amount of money? It is much easier to go to the nearest Money Remittance outlet and accept money from a friend or relative rather than go to banks, wait in long lines, and then travel home again.
3. We work to live.
Our salaries are often just enough to live on and cover our bills and essentials. If we do not have extra money to put into a bank account, and to save it for the rainy season, why do we need one? Yes, the 13th Month payment can help to boost savings, but after lean Ber Months, we need to party and celebrate Christmas with our families. The extra money that we get from time to time can help our families with their daily needs, rather than go into savings for some distant future desire.
4. Lack of Trust or I Trust What I Can See
If your money is in a bank account you can see your bank balance, your bank statements, and you can proudly get your bank book updated every month to see money going in and your balance increasing. If your money is in your house safe, or baul, you can see and feel your cash and use it whenever you need. There have been so many horror stories in the recent past of banks stealing money, bank managers getting greedy, money laundering and money going missing. There are scams, and scammers that target people with bank accounts, to relieve them of their well earned money, so there is still a huge trust issue when it comes to banks in the Philippines.
5. Who Pays Into Bank Accounts?
In the Provinces people are paid in cash, food, whiskey and beer. They work hard every day of the week, so that they can enjoy Sundays with their families. Why would you need to have a bank account to receive your weekly salary when you can get it in cash from your employer and give it straight to your family? Only people living and working in the City for International BPO's, IT Development companies, or in the big offices require employees to have a bank account to receive their salary, and even then, it is paid in and taken out just as quickly.
From the factors above, you can see that the BSP has a huge task on its hands to increase the banked population of the 7,641 islands that make up the Philippines, but in order to continue the development of the country, to boost the international economic status of the Philippines and to support the schools, government and infrastructure that make up the local economy, financial inclusion and education needs to be at the forefront of our awareness.
Having a bank account means that we can travel, learn, develop and grow. It means that we can support our family now and in the future, it means that we can pay for our goods, groceries and services online, it means that money is safer than in the house lock-box and means that we can build up our credit rating so when we want to purchase a motorbike, a car or a Condo Unit, we can get the credit that we need.
Cash is not always King. Credit is becoming King, and to get ahead of the curve, open a bank account and start to use it so you can build your future, today.
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