MANILA, Philippines, July 16, 2018 /PRNewswire/ -- As the Philippines fosters greater financial inclusion for 86 percent of Filipino households that remain unbanked and underserved, Inclusive Business models show potential in increasing access to relevant and accessible financial products and services.
"Creating a financially inclusive ecosystem in the Philippines is essential in boosting equitable growth and development, which creates more economic opportunities for low-income communities," said Philippine Trade Undersecretary and Board of Investments (BOI) Managing Head Ceferino Rodolfo.
The central bank added that financial institutions should leverage increased digitization and enabling policies, including the National Strategy for Financial Inclusion (NSFI).
"What we need now is for private sector players to take advantage of these opportunities," said Pia Roman Tayag, Managing Director of the Inclusive Finance Advocacy Office of the Philippines' central bank. "There's a big market whose needs mean different business opportunities for financial institutions."
One of the Inclusive Business models in the finance sector is Globe Fintech Innovations, Inc. or Mynt, which utilizes mobile technology to operate microservice payment service GCash and mobile loan provider Fuse Lending.
Microfinance institutions deliver financial services in a week, but Mynt takes 15 minutes. While remittance agents charge up to 10 percent interest, sending money on GCash is free. Unlike banks, GCash does not require a maintaining balance. Informal lenders charge up to 20 percent in monthly interest, Fuse's are as low as 2.5 percent. To date, Mynt has five million account holders engaging in about seven billion transactions monthly.
Another Inclusive Business model,1st Valley Bank, shows potential for replication in boosting agricultural development. One of 1st Valley Bank's products provide farmers with a loan of more than $600 per hectare, aligns with the six-month cropping cycle, and charges interest for as low as 1.33 percent monthly. This helps farmers increase their profits and lead better lives. 1st Valley Bank works with more than 10,000 farmers and targets to reach more of 300,000 underserved farmers in the island of Mindanao, where the bank operates.
Inclusive Business models are being implemented and making impact in industries outside the finance sector. The Philippine government is currently advocating the development of more Inclusive Business. Under the 2017-2019 (Investment Priorities Plan), the BOI may grant fiscal incentives to qualified Inclusive Business models.