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Digitization of the financial system improves business access to funds
Small firms will profit from the financial system’s digitization among other things because they will have the additional documentation needed to secure loans.
Bangko Sentral ng Pilipinas (BSP) Governor Felipe Medalla stated that financial inclusion in the nation increased during the pandemic due to the surge in the use of digital payments after the government implemented movement restrictions during the 56th Asian Development Bank (ADB) annual meeting currently taking place in Incheon, South Korea.
According to him, as technology is used more frequently in the financial system, small firms will have easier access to financing as a result. “If you include a financial trail, that will be very helpful,” he said.
But according to Medalla, “subsidized guarantee fees for first-time borrowers are indispensable.”
The BSP president however noted that “the other problem is if people see that government is there, they feel like they can get away without paying,” stating that “(with) the private sector, the obligation to pay is strong.”
There are numerous more factors, but the government’s ability to target those industries and correctly collect taxes is indispensable, according to him.
Since banks and financial technology companies, which provide electronic payment services, are unable to address this, Medalla claimed that the connectivity and telecommunication signal issue is being addressed.
In his words, “the private sector is quite imaginative” when it comes to providing services.
“Only the government is able to do many things. That’s the signal, and it’s also important to give the poor a safety net in case of calamity, he continued.
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