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Philippines Gains Highest Improvement in Digital and Financial Inclusion in 2016 - Brookings Report


The Philippines gained the biggest improvement in overall score in digital and financial inclusion in 2016. This is according to the Brookings Institution, one of the world’s oldest think tanks, which recently released the 2016 Financial and Digital Inclusion Project Report: Advancing Equitable Financial Ecosystems (Report). The 2016 Report highlighted that the Philippines increased its overall score by eight percentage points compared to its score in the 2015 Report. This upsurge was attributed to the launch of the Philippine National Strategy for Financial Inclusion (NSFI); strong performance in terms of mobile capacity, as measured through smartphone penetration; and highest rate of adoption of mobile money accounts among the South East Asian countries included in the Report.

In 2016, Brookings increased its sample to 26 geographically, economically and politically diverse countries, from just 21 in 2015. These countries were assessed using varied criteria classified under four general dimensions: Country Commitment 1 , Regulatory Capacity 2 , Mobile Capacity 3 , and Adoption of Traditional and Digital Financial Services 4. Brookings likewise expanded the scoring criteria to include existence of a consumer protection framework for financial services (under Country Commitment), smartphone adoption and availability of merchant payments via mobile money (under Mobile Capacity) and frequency of account usage (under Adoption). The Philippines garnered the highest scores in Country Commitment (100) and Regulatory Environment (100), also achieved a high score in Mobile Capacity (94) and a more modest one in Adoption (42). All these scores represent positive improvements from 2015 levels.

The 2016 Report acknowledges the work of the Bangko Sentral ng Pilipinas (BSP) in shepherding implementation of the Philippine NSFI and advancing the formalization of the high-level inter-agency Financial Inclusion Steering Committee (FISC). The BSP is also recognized for its (1) past leadership role in the Alliance for Financial Inclusion (AFI), an international organization of policymakers pursuing financial inclusion; (2) its commitment to the AFI Maya Declaration, a set of objectives aimed to deepen financial inclusion in the Philippines; and (3) its support to the Better than Cash Alliance, a multi-sectoral international coalition working to shift global use of physical cash to digital transactions. In addition, the BSP is cited as a front-runner among central banks in establishing a dedicated financial inclusion unit; for its work on financial inclusion data and reporting; and for the issuance of enabling and proportionate regulations.

The Report also notes the ongoing collaborative work among regulators and industry stakeholders to boost inter-operability, efficiency, convenience and utility of the country’s digital ecosystem. Foremost is the National Retail Payments System (NRPS), a policy framework that defines governance, institutional and operational principles to guide market players and retail payment channels. The NRPS aims to enable a more efficient, safe, affordable and inclusive retail payment infrastructure that allows digital transfers from any account to any account in any type of institution, through the use of any digital device. The NRPS targets to digitize 20% of retail transactions by 2020. This is a significant but necessary goal considering that currently, only one percent of the 2.5 billion payment transactions made in the Philippines is electronic.  The NRPS, together with the government’s cash-lite policies and programs to digitize disbursements, as well as industry-initiated agreements to inter-operate, are expected to further address the challenges in consumers’ adoption and usage of digital financial services, which is the area where the Philippines scored low in both the 2015 and 2016 Brookings Report.

Based on results of its cross-country analysis, Brookings provides key suggestions to further expand digital and financial inclusion in all countries including the Philippines. Their call to action includes setting of quantifiable financial inclusion targets to measure the success of initiatives; and data collection focused on barriers to mobile ownership, connectivity, and SMS/data usage to better inform the development of inclusive mobile ecosystems, and consequently the provision of digital financial services. Brookings also suggests greater coordination between financial and telecommunications regulators and industry players to address uncertainties in the regulatory environment, scale up the provision of financial services to target markets, and facilitate the development of digital identification mechanisms crucial for on-boarding of marginalized markets into the formal financial system.

For its part, the BSP remains committed to creating an enabling regulatory environment where digital financial products are provided safely and efficiently, benefitting the consumers with consistent and affordable services.


1  National level participation in international financial inclusion organizations; and existence of a financial inclusion strategy, quantifiable targets, government-supported demand side survey, and dedicated financial inclusion body within the public sector.
2  Agent banking, mobile network operator-led financial service deployments, e-money regulations, mobile money platform inter-operability, account access and usage, and cash-in/cash-out at agent locations.
3  Market penetration (unique subscribers); 3G mobile coverage by population; and availability of bill payments and international remittances via mobile money. 
4  Formal formal financial institutions’ account penetration among lower-income adults and women; mobile money account penetration among these same target groups; borrowing and saving at a financial institution; mobile phone usage in salary distribution (among wage-earners) and utility payments (among adults making regular bill/utility payments); debit card use; and percentage of adults using online bill payments and purchases.


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