Eight in 10 Filipinos have access to formal credit options in 2023, according to a new survey commissioned by consumer finance company Digido.
Of the 80 percent, 42 percent claim no change to the degree of accessibility of credit and claim approval when formally applying for it. The remaining 38 percent say access to formal credit improved in 2023 compared to 2022.
The survey betrays the mood of Filipinos when looking at both formal and informal sources of credit.
At the time of the survey, 57 percent of respondents had at least one outstanding loan from a formal lender and from non-bank financial institutions (NBFIs). Of this number, an online component made up 31 percent, followed by traditional banks’ branches (25 percent), digital banks (14 percent ), offline NBFIs (13 percent) and apps or websites of traditional banks (9 percent). Forty-eight percent borrow from friends or family members, according to the survey.
Respondents cite ease of application process (60 percent), convenient repayment methods (50 percent) and high probability of approval (47 percent) as key factors that influenced their decision to apply for a formal credit source in 2023.
Other positive influencing factors include convenient repayment schedule (43 percent), application through mobile app (42 percent) and attractive interest rates (30 percent). Preferences are similar across all income groups and regions.
In assessing payment habits in 2023 compared to 2022, 64 percent of surveyed borrowers self-report they always pay their loans on time, while 36 percent say they have missed repayments.
In terms of type of credit, personal loans proved the most popular formal credit option with 54 percent 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 percent), followed by credit cards (6 percent) and business loans (6 percent). Notably, 24 percent of respondents did not avail of formal credit in 2023, an increase from only 15 percent in 2022.
In terms of the amount of loans availed, 40 percent of respondents reported the amount of loans taken out in 2023 decreased compared to 2022.
The share of respondents for whom the loans increased stood at 28 percent. Moreover, 41 percent of respondents would like to raise the borrowing limit, indicating a significant portion of demand.
The survey also showed that 57 percent of respondents intend to take out a new loan in 2024 while 19 percent of consumers already have plans in place to do so.
Thirty-eight percent, meanwhile, indicate they will avail of a loan if the need arises. Notably, 76 percent of borrowers are satisfied with their experience from the formal lending institutions.
