Manila: A ranking Bangko Sentral ng Pilipinas (BSP) official underscored the need for banks to further diversify their products as the regulator provides policies that will allow the public to access financial products with lower fees.
According to Philippines News Agency, BSP Deputy Governor Mamerto Tangonan highlighted the potential for banks to improve savings and credit products, insurance protection, and investment offerings. The BSP has been proactive in encouraging banks to lower their fees, as demonstrated through the issuance of Circular 1238. This policy mandates that charges for interbank transfers align with those for same-bank transactions.
Tangonan pointed out that the top 20 banks, which represent approximately 90 percent of the total digital transactions volume, are being closely monitored for compliance with Circular 1238. The expectation is that adherence will have a significant impact on the financial system. However, several banks have yet to comply, and the BSP is currently reviewing reports from these non-compliant institutions.
Despite the challenges, Tangonan emphasized the importance of reducing transaction fees to encourage wider use of digital payment systems. He stated that lower fees are crucial for creating a "pay-anyone-anywhere-anytime" ecosystem, which becomes increasingly valuable as more users and merchants join the network. This expansion of the network not only benefits users but also reduces the average cost for banks and e-wallet providers, facilitating the maintenance of low fees.
Tangonan explained the concept of positive network externalities, where each new user generates both financial and non-financial benefits for payment providers and other members of the network. This dynamic not only supports broader economic growth and financial inclusion but also enhances the network's overall value.
The BSP official also noted that additional digital-based offerings could help banks attract more account holders and increase their revenues. The push for diversification and lower transaction costs aims to create a more inclusive and efficient financial environment in the Philippines.
