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Case Study on Philippines: Electronic Banking: Delivering Microfinance Services to the Poor in the Philippines


This paper argues that efficient and cheaper methods of providing financial services, such as electronic banking (e-banking) services should also be offered to microfinance clients. The paper: * Presents an overview of the microfinance industry in the Philippines, as well as the recent developments of commercialization, competition and innovations in microfinance products and service delivery. * Presents the following two cases of existing models wherein technological innovations of electronic banking are used to serve microfinance clients: o The use of mobile telephones through the ââ?¬Å?short messaging servicesââ?¬? (SMS); o The distribution of ââ?¬Å?automated teller machineââ?¬? (ATM) cards to microfinance clients. * Takes a closer look at the implication for regulation particularly by the Bangko Sentral ng Pilipinas (BSP). * Discusses the direction of policy, existing relevant regulations and rules. The paper concludes that: * Innovations undertaken by microfinance institutions (MFIs) in the Philippines consider the unique characteristics of poor and low-income clients; * Innovations in the field of electronic banking will more effectively and appropriately reach the needs of this market; * The following factors promise a bright future insofar as reaching the poor through electronic banking is concerned: o The regulatory approach of the BSP, o The receptiveness of the existing market as well as the potential users of the e-banking products; * By carefully managing all these factors, the future will open wide opportunities for expanded outreach and usage as well as increased diversification of services.

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