Digitization of the financial system benefits small businesses, among others, since they will have additional proof required in securing funding.
During the ongoing 56th Asian Development Bank (ADB) annual meeting in Incheon, South Korea, Bangko Sentral ng Pilipinas (BSP) Governor Felipe Medalla said financial inclusion in the country increased during the pandemic following the surge in the use of digital payments after the government implemented movement restrictions.
Small businesses’ access to credit will also improve in line with the greater use of technology in the financial system, he said, “if you include financial trail, that will be very helpful” because the need for collateral will be reduced.
However, Medalla said “there’s no substitute for subsidized guarantee fees for first-time borrowers.”
Despite this, the BSP chief also pointed out that “the other problem is if people see that government is there, they feel like they can get away without paying”, citing that “(with) the private sector, the obligation to pay is strong.”
“There are many other things but there’s no substitute for government being able to collect taxes properly and being able to target those sectors,” he said.
Medalla said the issue of connectivity and telecommunication signal is being addressed since banks and financial technology firms, which offer electronic payment services, cannot address this.
He said “the private sector is quite imaginative” in delivering services.
“There are many things that only government can do. That’s the signal and making sure that poor people, when they’re hit by disasters, they have a fallback position,” he added.
CURRENTPH NEWS SERVICE