DESPITE evidence that Information Communication Technology (ICT) and electronic-government (IEG) development has ushered financial inclusion, the impact could just as easily head south if inequality persists.
In a discussion paper published by the Bangko Sentral ng Pilipinas (BSP), researchers found that equality in the development of IEG could lead to greater financial exclusion. Without the necessary infrastructure and services to promote the use of digitalization nationwide, this would be useless to consumers, it added.
“The necessity of developing crucial ICT and digital infrastructure and improving access to them is vital. Digital financial services will not be of much use to consumers if they do not have access to the needed infrastructure, such as good internet and mobile connection,” the discussion paper stated.
The researchers noted that the development of crucial ICT infrastructure and improving access to it have a greater marginal effect on financial inclusion.
“IEG is more strongly associated with usage of financial services than with availability of or access to such services,” the research stated.
Apart from this, the study found that IEG can have a greater impact on financial inclusion in lower-income economies compared to those that have higher incomes.
For developing countries like the Philippines, this underscored the importance of developing IEG to achieve greater financial inclusion.
“A probable explanation for this observation is that high income countries have relatively higher proportions of financially included individuals and households in their populations, thus, interventions will only have marginal effects on financial inclusion,” the paper stated.
Last year, in his keynote speech at the Digital Financial Inclusion Awards on Tuesday, BSP Governor Eli M. Remolona Jr. said 65 percent of households already had accounts in 2022, higher than the 56 percent posted in 2021. Remolona also said 65 percent of households have accounts in 2022 and 42 percent of Filipino adults have made digital transactions.
The BSP Governor said the goal is to convert 50 percent of the total volume of retail payments into digital form and to onboard 70 percent of Filipino adults to the formal financial system.