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BWTP 2005-01: 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 â??short messaging servicesâ?? (SMS); o The distribution of â??automated teller machineâ?? (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.

Bangko Sentral ng Pilipinas
Authors Keywords
Roman, Pia Bernadette; Jimenez, Eduardo; microfinance; microfinance institutions; financial services; E-banking;
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Published in 2005 and available in the BWTP or can be downloaded as full text Downloaded 1,072 times since November 25, 2011