amando m tetangco, jr : opportunities in financial inclusion and financial integration speech by mr amando m tetangco, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the baiphil induction of directors and officers and first general membership meeting, makati, 21 july 2015. * * * this is an auspicious time to be involved in baiphil. your term covering fiscal year july 2015 - june 2016 coincides with baiphil ’ s 75th anniversary! by any measure, this is a significant milestone. congratulations baiphil! and congratulations to your officers and members, past and present! by tradition, diamonds symbolize 75th anniversaries. this is because diamonds represent a highly prized quality – which is, enduring fidelity. faithfulness. commitment. i am pleased to know therefore, that the theme you selected for this year ’ s induction of officers is – “ building capacity for financial inclusion and integration. ” the industry is in the midst of so many facets of change that the concept of “ capacity building ” takes on new dimensions. it is no longer enough that you position yourself as a trainor for your peers. baiphil itself must navigate through a fast - evolving market landscape, appreciate and relate all the strands of change, if you are to become an effective venue for continuing education. training and education cannot be just about holding lectures and workshops. it is more akin to telling a good story with different chapters. in financial inclusion, we see the dimension of access and calibration so that the financial system itself is responsive to the diverse needs of differentiated stakeholders. how much more appropriate can this be than in an archipelago such as the philippines. this literally forces us to think out of the box, that comfort zone that we refer to as “ traditional banking ”. in financial integration, we bring together the collective aspirations of a regional community. this materially changes the landscape but more importantly, it does so at the same time that global best practices are themselves being re - set to a higher and more prescriptive bar. this forces us to think within the box, examining what we have, how we wish to position ourselves in this sea of change and what we need to do to remain competitively in the service of our respective constituents. in each of these two facets, we have a lot that needs to be covered. taken together, the strategic and tactical implications are

significant. at the level of each bank, choices must be made today so that you can maximize competitive advantages that you expect will be your strength in the future. at the level of the industry, this requires an unwavering commitment to continuing education, to appreciate nuances without losing sight of the overall policy agenda of institutionalizing change that can strengthen the system and its institutions. indeed both financial inclusion and financial integration pose challenges as well as vast opportunities. to dimension what exactly lies ahead of us, perhaps we need to step back a bit. let me share some indicative figures that came out of our national baseline survey on financial inclusion done early this year. i am sure you will find these useful in crafting your way forward : • only 4 out of 10 filipinos save. of those who save, roughly 30 % save in banks while nearly 70 % keep their money at home. bis central bankers ’ speeches • 6 out of 10 adults with bank accounts indicated that the bank ’ s reputation is their number one consideration in opening a deposit account. around 50 % of respondents mentioned interest rates as another major consideration, followed by minimum maintaining balance ( for info only – 45. 9 % ), proximity of the banking office ( 39. 8 % ) and the way the bank employees treat their clients ( 34. 8 % ). • 47 % of filipinos borrow money, of whom 72 % borrow from family, friends and informal lenders. banks as source of borrowing stood at only 4. 4 %, lower than lending / financing companies ( 12 % ), cooperatives ( 10. 5 % ), microfinance ngos ( 9. 9 % ) and government entities ( 6. 1 % ). • the main purpose for borrowing money is to buy food ( 59. 5 % ), school related expenses ( 38 % ) and to finance emergencies ( 32. 7 % ). • the primary considerations in borrowing money are interest rates ( 57. 5 % ), loan amount ( 41. 7 % ), period to pay for the loans ( 35. 0 % ), ease of loan application ( 33. 1 ), reputation of the credit institution ( 24. 5 % ), amortization ( 14. 9 % ), collateral ( 14. 3 % ), fees and other charges ( 11. 4 % ), and processing time ( 11. 0 % ). • more than 50 % of adults who have transacted with banks and atms are just somewhat satisfied with their transactions