BPI launches microfinance bank to target underserved entrepreneurs

MANILA, Philippines – Ayala-led Bank of the Philippine Islands (BPI) launched a microfinance bank to target an emerging and underserved sector of the market in the name of financial inclusion.

The new microfinance bank, called BPI Direct BanKo, was born out of the merger of BPI Direct and BPI Globe BanKo and is aimed at serving small business loans to self-employed micro-entrepreneurs (SEMEs).

"This is a relatively new business venture for us and we intend to build this out quickly. By the end of this month we will have 40 branches and offices, by the end of this year we target 100 branches and offices," said BPI president Cezar Consing at BPI Direct BanKo's media launch on Tuesday, July 25.

The microfinance bank recently opened 15 new branches spread throughout Bicol, Negros Oriental, Davao, and Central Luzon, bringing its current total to 24.

"The country's prosperity will only be meaningful if a wider swath of the population is touched by development and progress. BanKo is precisely positioned to do just that," Consing said.

BPI Direct BanKo chairperson Natividad Alejo also noted that "there are currently 2.5 million households operating in that segment of the market and the need to provide focus and financial services is very evident since only around 31% of Filipinos have bank accounts and 24.5% actually never save," based on data from the Bangko Sentral ng Pilipinas (BSP).

"The segment in particular encompasses the higher end of the C space and the lower end of the B space. The small businessmen and women who own at least one business employing less than 10 people," she added.

BanKo will provide low-cost banking services and loans to this market, whose borrowing needs, Alejo pointed out, "are usually too big for the microfinance institutions and rural banks but too small for commercial banks."

The new microfinance bank's primary product, the NegosyoKo loan, is intended to provide capital for SEMEs to expand their businesses. The loan ranges from P25,000 to P300,000, and is designed to be processed within a target average of 3 to 5 days.

BPI Direct BanKo also features financial advisers who act as loan officers to engage entrepreneurs and help them choose the appropriate financial solutions to expand their businesses.

While microfinance loans account for only a small portion of BPI's total loan portfolio at present, Consing said the segment is crucial to the bank's future.

"The current BSP governor, Governor Nestor Espenilla Jr, owned the financial inclusion initiatives when he was deputy governor of the central bank. [Financial inclusion] is important to the current leadership of the BSP and it is obviously very important to us because this is where the economy is going," said the BPI president. – Rappler.com