Microenterprise Access to Banking Services

The small business owners in their big moment at the 2008 Citi MOTY Awards held in Manila.

MABS Participating Bank Clients Bag Top Citigroup Awards

November 19, 2008 – The two top awardees for the 2008 Citi Microentrepreneur of the Year (MOTY) Awards are microenterprise borrowers of the Microenterprise Access to Banking Services (MABS) Program participating rural banks. In addition, one regional winner and two special awardees likewise were clients of MABS participating banks.

MABS is a United States Agency for International Development (USAID)-supported effort jointly implemented with the Rural Bankers Association of the Philippines (RBAP), with oversight provided by the Office of the President through the Mindanao Economic Development Council (MEDCo). MABS works with rural banks to assist them in developing their capability to profitably provide financial services to microentrepreneurs.

Estela Lagunzad of Tacloban City was declared the “Masikap” National Awardee. A loan client of Rural Bank of Dulag in Leyte, this former Avon-Natasha-Tupperware peddler is now the successful owner of a retail store, an eatery, and of a nursing cap manufacturing business. She currently employs 20 workers in these businesses, besides managing the Rondayan Kids Band, whose three members are her own kids. She profits approximately Php 800,000 per year.

Meanwhile, Anunciacion Santillan of Bantayan Island was pronounced the “Maunlad” National Awardee. Before she became a loan client of First Agro-Industrial Rural Bank (FAIR Bank) in Cebu, she was a struggling sidewalk vendor using a folding bed as her stall. Being money-wise and hardworking, she now owns three retail stalls that accumulate monthly sales of more than Php 100,000. She currently employs nine workers and has recently put up a hog-raising business.

Microentrepreneurs qualify for the “Masikap” awards when they have business assets worth less than Php 300,000 and have successfully started businesses that are now reliable sources of income for the family; for the “Maunlad” awards, their business assets should be between Php 300,000 and Php 1 million and have grown businesses that are generating employment for people apart from household or family members..

Other winners from MABS participating rural banks include Cerilo Delfin of Alicia, Isabela (Luzon Regional Winner – Masikap), a “puto” and “kutsinta” manufacturer and a client of the First Isabela Cooperative Bank (FICOBank); Julito Malinao of Bogo City, Cebu (Special Award – Masikap) who is also a client of FAIR Bank and is a former OFW who now owns and manages the biggest and most popular beauty salon and spa in Bogo; and Elino Andres of Nasugbu, Batangas (Special Award – Masikap) who is a client of Bangko Kabayan. Mr. Andres is a diligent traveling salesman and an avid mobile phone banking client who uses the bank’s Text-A-Payment service to pay his loans via GCASH. He also trains and assists other clients in using mobile phone banking services.

The MOTY Awards – a joint undertaking of Citigroup, the Microfinance Council of the Philippines, Inc. (MCPI), and the Bangko Sentral ng Pilipinas (BSP) – aims to promote the development of microfinance and microenterprises in the Philippines by recognizing outstanding entrepreneurs who have substantially grown their businesses, improved the quality of their lives, and contributed to the financial growth of their communities.

In his keynote, BSP Governor Amando Tetangco Jr. said, “Our banks have successfully taken their strategic place in providing financial services to the previously unbanked.” He added that, “rural banks have consistently accounted for a significant portion of the [MOTY] winners. Both of our national winners this year are clients of rural banks. I believe this trend will continue as more banks provide microfinance services.”

BSP data showed that banks now have more than 802,000 active microenterprise borrowers and over 750,000 of these are clients of rural banks. As of June 2008, MABS participating banks have disbursed approximately two million loans to over half a million microenterprise borrowers. Almost all the funding for these microenterprise loans come from deposits mobilized from the same communities where the loans are made.

The MOTY Awards is now on its sixth year. It was first conducted in 2002 as part of the activities marking Citigroup’s 100 years of presence in the Philippines. This year’s MOTY Awards event saw the support of BSP Governor Tetangco, Citigroup Country Officer Sanjiv Vohra, Philippine Daily Inquirer Chairperson Marixi Prieto, and MCPI President Rolando Victoria.

US Ambassador to the Philippines Kristie A. Kenney at the 51st Charter Anniversary Symposium of RBAP last November 19, 2008 in Manila

Historic RBAP 51st Charter Symposium Highlights Use of Technology in Rural Banking

United States Ambassador to the Philippines Kristie A. Kenney spoke of elections, rural banking, microfinance, and technological innovations at the 51st Charter Anniversary Symposium of the Rural Bankers Association of the Philippines (RBAP). In line with the latest trends and developments in rural banking, the theme of this year’s RBAP event was “Banking on Technology”.

The RBAP symposium gathers the Association’s member rural banks every year since RBAP’s establishment in 1957. The annual symposium has now evolved into a forum for learning and knowledge sharing, showcasing the latest banking and technology innovations and providing updates from and on RBAP’s institutional partners, the private sector, and the government.

With the rural banking sector now as the leading, growing, and responsive force in the Philippine banking industry, it is also at the forefront in the provision of microfinance services and in helping address poverty. This is true especially in the provincial and rural areas where 97% of rural bank outlets and where most of the lower-income households are found.

As of June 2008, rural bank branches and head offices totaled 2,146, a substantial increase from the 1,921 branches in 2003. This overall increase of 225 rural bank branches in contrast to commercial and universal banks’ increase of 13 branches and thrift banks’ increase of 37 branches signifies the rural banking sector’s stronger growth versus the other banks.

Ambassador Kenney said, “Rural banks are now recognized as the primary providers of financial services to micro and small enterprises in the Philippines.” She expounded that not only are the rural banks “providing outstanding service to clients, but [they] have gained a global reputation for innovation and excellence.”

Bangko Sentral ng Pilipinas (BSP) data showed that the rural banks’ total assets as of June 2008 exceeded Php 172.5 billion, up 92% from Php 89.7 billion in 2003 and with an annual average growth rate of 15%. Meanwhile, rural bank statistics as of June 2008 should that the loan portfolio of rural banks stood at PhP 110 billion with number or deposit accounts now exceeding 6 million at a record 123.5 billion, indicating a deposit to loan ratio of 1.1:1, with surplus deposits exceeding loan portfolio by 12%.

This growth is partly due to innovations in banking technologies such as mobile phone banking. Ambassador Kenney explained, “this critical innovation… has given rural banking clients a less costly and more convenient alternative to traditional, over-the-counter banking… making it easier for banks to serve remote areas.” With this new mobile phone-based technology, rural banks can now reach out to more Filipinos, or to virtually anyone in the country who has an access to a mobile phone.

A Filipino innovation, mobile phone banking for rural banks in the Philippines is being developed and implemented by RBAP in partnership with USAID’s Microenterprise Access to Banking Services (MABS) Program and with the support of Globe Telecom’s G-Xchange Inc. (GXI) and their innovative GCASH platform.

GXI President Rizza Maniego-Eala mentioned that rural banks have developed their own unique products with their own special brand of mobile phone banking services including Text-A-Payment, Text-A-Deposit, Text-A-Withdrawal, and Text-A-Sweldo.

At present, 43 rural banks have already been accredited and registered to offer mobile phone banking with the support of RBAP-MABS. During the Symposium, 10 of these accredited banks were recognized with special awards for being the top performers in terms of mobile phone banking transactions using the GCASH platform by Globe Chairman Jaime Zobel de Ayala. These banks included Philippine Rural Banking Corporation (PR BANK), Green Bank, Cantilan Bank, 1st Valley Bank, Agribusiness Bank, GM Bank, Bangko Kabayan, Rang-Ay Bank, Rural Bank of Victorias, and Bangko Luzon.

RBAP-MABS also launched their new trademark slogan for their new mobile phone banking services: “Rural Banks now offer mobile phone banking and mobile commerce solutions for their clients so that they can Send money, Make money, and Save money by using their mobile phones. It puts a whole new meaning to SMS”

Smart Communications also signed an agreement during the Symposium to partner with RBAP in offering the Smart Money platform for interested rural banks. This is aimed at expanding mobile phone banking services to Smart subscribers.

Representatives from ten rural banks get recognition from Globe for being the top performers in terms of mobile phone banking transactions using the GCASH platform.

Globe Recognizes Top-Performing Rural Banks in Mobile Phone Banking

Ten local rural banks were recognized for their top performance in providing mobile phone banking services for the Filipinos in the 51^st Rural Bankers Association of the Philippines (RBAP) Charter Anniversary Symposium held last November 18-19, 2008 in Manila.

A Filipino innovation, mobile phone banking for Globe subscribers of rural banks in the Philippines is being developed and implemented by RBAP in partnership with USAID’s Microenterprise Access to Banking Services (MABS) Program and with the support of Globe Telecom’s G-Xchange Inc. (GXI) and their innovative GCASH platform. GXI President Rizza Maniego-Eala said that rural banks have now developed their own special brand of mobile phone banking services, which include Text-A-Payment, Text-A-Deposit, Text-A-Withdrawal, and Text-A-Sweldo (salary).

At present, 43 rural banks have already been accredited and registered to offer mobile phone banking with the support of RBAP-MABS. Of these accredited rural banks, 10 were recognized for being the top performers in terms of mobile phone banking transactions using the GCASH platform.

Globe Chairman Jaime Zobel de Ayala II presented the awards to Philippine Rural Banking Corporation (PR Bank), Green Bank, 1st Valley Bank, Cantilan Bank, Bangko Kabayan, Agribusiness Bank, Rang-ay Bank, GM Bank, Rural Bank of Victorias, and Bangko Luzon.

As of October 2008, almost 70,000 rural bank clients and employees have already registered for mobile phone banking services, with mobile phone transactions at rural banks in 2008 increasing by over 250% from the same period in 2007.

Speaking in favor of the rural banks, Zobel de Ayala said that the rural banking sector “is a major contributor to the national development agenda”, a catalyst to contribute to economic growth and social development. He added, “If we are to see our economy grow in a sustainable way, we have to find ways to create value for Filipinos at all levels of society.”

This is where the importance of technology comes in. The mobile phone banking services initiative developed and rolled out through the collaboration of RBAP-MABS, participating rural banks, and GXI has given rural banking clients a less-costly and more convenient alternative to traditional, over-the-counter banking.

Zobel de Ayala commented, “Technology can play an important role in scaling up the reach and broadening access to financial services for low-income consumers. It can serve as an important low-cost conduit, to bridge the linkage between customer and service provider.”

“It is in democratizing access to capital, and encouraging its widespread use through partnerships and collaboration across sectors, that we can empower those at the lower end of the income hierarchy and give them a fair chance and opportunity to drive their own economic and social destinies”, Zobel de Ayala said in closing.

The RBAP Symposium also served as venue for the launch of the Program’s new trademark slogan for its new mobile phone banking services: “Rural Banks now offer mobile phone banking and mobile commerce solutions for their clients so that they can ‘Send money, Make money, and Save money’ by using their mobile phones. It puts a whole new meaning to SMS.“