In its latest survey, consumer finance company Digido found that 80 per cent of Filipinos believe that formal credit options became more accessible in 2023.
Overall, 42 per cent of respondents to Digido believed that the degree of accessibility of formal credit options remained unchanged and claimed to be usually approved when applying for it. Meanwhile, the remaining 38 per cent revealed that their access to formal credit has improved in 2023 compared to 2022.
The survey also found that 57 per cent of respondents had at least one outstanding loan from a formal lender, with non-bank financial institutions (NBFIs) with an online component making up 31 per cent, followed by traditional banks’ branches (25 per cent), digital banks (14 per cent), offline NBFIs (13 per cent) and apps or websites of traditional banks (nine per cent). Forty-eight per cent have also borrowed from friends or family members.
Easy application processes (60 per cent); convenient repayment methods (50 per cent) and high probability of approval (47 per cent) emerged as the biggest factors influencing Filipinos to apply for a formal credit source in 2023.
Other positive factors include a convenient repayment schedule (43 per cent), application through a mobile app (42 per cent) and attractive interest rate (30 per cent).
Filipino payment habits
Assessing their payment habits in 2023 compared to 2022, 64 per cent of surveyed Filipino borrowers self-report that they always pay their loans on time, whilst 36 per cent of respondents say they have missed repayments.
In terms of type of formal credit, personal loans were the most popular formal credit option, with 54 per cent of respondents having one in 2023 due to its flexibility and variety of use. ‘Buy now, pay later’ is the second most popular type of loan (12 per cent), followed by credit cards (six per cent) and business loans (six per cent).
In terms of the amount of loans availed, 40 per cent of respondents report that the amount of loans taken out in 2023 decreased compared to 2022. The share of respondents for whom the amount of loans has increased is at 28 per cent. Moreover, 41 per cent of respondents would like to raise the borrowing limit, indicating a significant portion of demand.
Fifty-six per cent of respondents also cite online as their preferred channel for obtaining formal credit, compared to 37 per cent for offline channels.
Room for improvement in terms of customer experience for all formal credit institutions remains, with 48 per cent of respondents also stating that loan rates need improvement, 35 per cent preferred a better repayment schedule, and 33 per cent would like to use more repayment methods.
