Pursuing Financial Inclusion, Financial Education and Consumer Protection:

The Case of the Philippines

Dr. Johnny Noe E. Ravalo Assistant Governor

Financial Supervision Research and Consumer Protection Sub-Sector

OECD-Thailand Seminar on Financial Inclusion and

Financial Literacy in Asia, Bangkok, Thailand, Dec 2014

The Persuasive Argument For Financial Inclusion

Financial markets cannot be simply about skylines and formal businesses

…it must recognize subtle differences across markets

…and respond to the needs of its broad stakeholders

Plus the Realities of an Archipelagic Economy

Baguio is centered on tourism and its educational institutions, of which it has at least eight colleges and universities, as well as a plethora of trade and technical schools. Based on previous census, almost half of the city's population are students, many of whom come from nearby provinces, with numerous foreign students to add to the diversity.

Cebu is one of the most developed provinces in the Philippines , frequently ranked as among the best island destinations. It has popular tourist destinations such as Mactan Island and Moalboal. In a decade it has transformed into a global hub for furniture making, tourism, business processing services, and heavy industry

Cagayan de Oro is the melting pot of Mindanao because of its accessibility, business growth and attractions. Being the business hub of Northern Mindanao region, the city is among of the most progressive & competitive cities in the PHL.

Plus the Realities of an Archipelagic Economy

Three-Pronged Approach to Financial Inclusion

Broadening access to financial prod’s

and services

Expanded physical network

• Liberalized branch banking • Micro-banking Offices • Other Financial Service Provider • Technology driven business

models

Improving mix of financial products

• Microdeposit • Microenterprise loan • Micro-housing/Micro-agri loan • Microinsurance

Customer On-Boarding

• Updated AML rules and regulations

Broadening access to financial prod’s

and services

Deepening roots of financial education

• Saving for the future (retirement)

• Saving for uncertainties (liquidity)

• Avoid over-indebtedness

• Protection from fraud and scam

Three-Pronged Approach to Financial Inclusion

Broadening access to financial prod’s

and services

Extending the scope of consumer

protection

The BSP financial consumer protection framework

visualizes an engaged stakeholder in an inclusive

financial system and an enabling environment that

protects the interest of financial consumers

Deepening roots of financial education

Three-Pronged Approach to Financial Inclusion

Broadening access to financial prod’s

and services

Extending the scope of consumer

protection

Deepening roots of financial education

Three-Pronged Approach to Financial Inclusion

• Transparency & disclosure • Fair treatment • Protection of information • Redress mechanisms • Financial education

Rate the banks on a scale of 1 to 4

The Demographic Challenges Are Not Trivial

The Demographic Challenges Are Not Trivial

(20,000)

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

under 40,000 40,000-59,999 60,000-99,999 100,000-249,999 250,000 and over

Total Savings of Families by Income Class

NCR

Central Visayas

SOCKSARGEN

No saving is reported for families earning less than

P100,000 p.a.

Saving is highly dependent and skewed towards high

income

The Demographic Challenges Are Not Trivial

The Demographic Challenges Are Not Trivial

Financial Stability

Banking Supervision

Consumer Protection

Source: www.hotfrog.com

Institutionalizing Consistency and Commitment

Poverty Alleviation

Without sustained means to generate cashflows

Financial Awareness

With cashflow but a passive entity in the market

Financial Inclusion

Smaller scale cashflows with no regular access

Consumer Protection

With cashflow but vulnerable to malfeasance

Institutionalizing Consistency and Commitment

Institutionalizing Consistency and Commitment

• Surveys all say that Financial literacy levels are rather low . . .

• But we also have a hard time with evaluating our interventions

• Demographic differences should matter in our delivery and the content of materials

• Stakeholder support is essential … but conflicts of interests are present

Pursuing Financial Inclusion, Financial Education and Consumer Protection:

The Case of the Philippines

Dr. Johnny Noe E. Ravalo Assistant Governor

Financial Supervision Research and Consumer Protection Sub-Sector