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Micro-Banking Offices, Micro-Deposits Drive Gains in Financial Inclusion


In its latest report on the state of financial inclusion in the Philippines, BSP provides an assessment of how access to and usage of financial services has changed in the past five years (2011-2015). According to the report, financial access has expanded in terms of number and reach of banks and other financial institutions. There is also improvement in usage of financial services as seen in the growth of deposits, loans, microfinance, and electronic money.

For access, worth highlighting is the growth in micro-banking offices (MBOs) which are low-cost banking infrastructure that can be established in municipalities where it is not feasible to set up a regular branch. While regular branches continue to increase in number, they remain concentrated in the National Capital Region. MBOs have been more contributory to financial inclusion by extending the reach of financial services to underserved and unserved areas. Majority of MBOs are located in areas outside Metro Manila particularly in the regions of CALABARZON, Bicol, Western Visayas, and MIMAROPA. Most municipalities that were previously unbanked are now enjoying access to banking services because of MBOs.

There are 617 MBOs based on the latest available count as of June 2016, an increase of 93% from 320 MBOs during the same period in 2012.  The number of local government units (LGUs) with MBOs grew by 105% to 393 LGUs in June 2016 from 192 LGUs in June 2012. To date, 75 municipalities are being served by MBOs alone. MBOs increased at an average year-over-year (y-o-y) rate of 18% which is faster than the growth of other types of banking offices (4%) and ATMs (13%).

When it comes to usage of basic savings accounts, there has been a remarkable growth in micro-deposits which are specifically designed to the low-income sector. A micro-deposit account has a maintaining balance not more than PhP 100 with average daily balance not exceeding PhP 40,000. This deposit account does not have dormancy charges.

The number of micro-deposit accounts grew by 217% to 2.9 million accounts in June 2016 from 925,389 accounts in June 2012. The total amount of micro-deposits increased by 181% to PhP 6.3 billion in June 2016 from PhP 2.2 billion in June 2012. Micro-deposit accounts grew at an average y-o-y rate of 34% which is faster than the growth of other deposit products (6%).

While the environment for financial inclusion continues to improve, changes appeared to be gradual and slower in comparison with our peers. For instance, data from the World Bank indicate that the share of Filipino adults with a formal account increased by 4.7 percentage points to 31.3% in 2014 from 26.6% in 2011 which appears modest compared to the improvement among lower middle income countries which is 14 percentage points.

Recognizing that much work needs to be done, BSP remains committed in nurturing a conducive environment to financial inclusion. At the national level, BSP is leading the implementation of the National Strategy for Financial Inclusion (NSFI) together with fourteen (14) other government agencies. In June 2016, Executive Order No. 208 was signed to institutionalize the Financial Inclusion Steering Committee (FISC), the governing body that provides strategic direction and overall guidance in the NSFI implementation. The NSFI aims to systematically accelerate the level of financial inclusion in the country through greater collaboration between public and private sector stakeholders.

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