NextGen Day

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) has emphasized the role of microfinance institutions (MFIs) in increasing access to financial products and services for micro and small businesses, particularly in rural regions.

MFIs can further increase their reach through digital transformation, according to BSP Governor Benjamin Diokno, who spoke at a press conference on Thursday.

MFIs, according to Diokno, are essential partners of the government in achieving financial inclusion because they are accessible to 84 percent of local government units (LGUs).

MFIs are present in more than half of unbanked LGUs (57%) as well.

“At the moment, 144 banks are involved in microfinance.” “With a total microfinance loan portfolio of PHP26 billion, they provide safe and inexpensive financial services to roughly 2 million borrowers,” he said.

Non-bank MFIs, including as cooperatives, have aided 8.8 million members, offering PHP288 billion in outstanding loans, according to the BSP chief.

Microfinance non-governmental organizations, on the other hand, provided 6.2 million consumers with a total loan of PHP50 billion.

“By doing so, the BSP recognizes technology’s potential as a game changer for microfinance,” he said.

According to Diokno, the usage of digital loan disbursement and collection, as well as online payment systems, is gaining traction.

He went on to say that mobile applications give a consistent self-service experience for accessing account information and using online financial services.

MFIs have also sought innovation in back-end operations, such as automated financial management systems and credit scoring and decisioning models, according to Diokno.

He claims that adopting digitization will make it easier for microfinance clients to migrate from cash to digital transactions, which will help the BSP achieve its digital payment targets.

“Collaboration is critical in establishing common digital platforms or facilities among MFIs to produce a multiplier impact in the microfinance sector,” he continued.

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