By Beting Laygo Dolor, Contributing Editor

The country still has a long way to go in convincing the general population that it’s safer and better to keep their cash in the bank rather than in piggy banks under their beds.

Data from the Bangko Sentral ng Pilipinas (BSP, the Philippines’ central banking authority) released last week showed that less than half of the Philippine population have bank accounts.

With a total population of some 110 million, about 51.2 million adult Filipinos still have no bank accounts as of last year.

By the end of last year, only 29 percent of the country’s adult population were found to be maintaining bank accounts. The adult population was then pegged at 72 million.

It is worth noting that in many Western countries, minors including newborns already possess bank accounts, opened for them by their parents but maintained on their own by the time they enter their teen years.

Not so in the Philippines, although a BSP survey showed the situation was improving. Between 2017 and 2019, the BSP’s Financial Inclusion Survey showed that five million Filipinos finally entered the formal banking sector by having their first accounts, usually in the form of ordinary savings.

In the survey, the BSP said: “The six percentage point increase in account penetration represents an additional five million Filipinos opening an account within that two-year period, a notable improvement from the 0.6 percentage point growth between 2017 and 2015.”

Not surprisingly, the lower the economic class, the lower the bank account ownership. However, the penetration rate was still surprisingly low for the upper income groups.

The penetration rate for the A-B-C classes was placed at 43 percent, while for the D class, it was 27 percent last year, from 14 percent in 2017.

The BSP said that while still significant, “the account penetration gap in socio-economic class has considerably narrowed in 2019 compared to 2017 where class ABC posted account penetration almost four times higher than class E.”

The study determined that 45 percent of the unbanked were hampered by lack of money to open an account, while 27 percent said they do not need a bank account. Another 26 percent lacked the documentary requirements such as government-issued IDs or company IDs to open accounts.

The BSP has an ambitious target of 70 percent inclusion rate for all adults by 2023.

It is worth noting that there has been a noticeable acceleration in the use of digital financial services offered by banks and e-money issuers in recent months, as a result of the lockdown that followed in the wake of the global Covid-19 pandemic.

In recent months, e-money account holders rose from eight percent of adults to 12 percent.

A growing number of Filipinos who used to avoid opening and maintaining bank accounts are being forced to do so in order to access government benefits such as SSS and/or Pag-IBIG loans, as well as salaries from either the private or public sectors.

More than half of recipients of government benefits received funds via fund transfers to their accounts, or in the form of cheques.

Some Filipinos hesitate to open bank accounts because of their or their relatives’ past experience with provincial financial institutions.

In far-flung provinces, where the country’s top banks barely have a presence, countless residents have been victimized by rural banks as well as savings and loan associations that have closed shop, leaving them with no recourse to recover their savings.

Quasi banks have also appeared from time to time, all offering impossibly high interest earnings. Most are variations of Ponzi schemes, usually preying on the poor and poorly informed.