80% Filipinos Perceive Increased Accessibility Formal Credit Options

In 2023, eight out of 10 Filipinos found formal credit options more accessible, according to a recent survey commissioned by consumer finance company Digido. Of this 80%, 42% reported no change in accessibility, while 38% claimed improved access compared to 2022.

The survey revealed that 57% of respondents had at least one outstanding loan from a formal lender, with non-bank financial institutions (NBFIs) with an online component being the most common (31%). Borrowing from friends or family accounted for 48% of respondents.

Key factors influencing the decision to apply for formal credit in 2023 included the easy application process (60%), convenient repayment methods (50%), and a high probability of approval (47%). Other positive factors included a convenient repayment schedule (43%), mobile app application (42%), and attractive interest rates (30%).

Across all income groups and regions, preferences for these factors were similar. Regarding payment habits, 64% reported always paying loans on time, while 36% admitted to missed repayments.

Personal loans were the most popular formal credit option (54%), followed by ‘Buy now, pay later’ (12%), credit cards (6%), and business loans (6%). Notably, 24% of respondents did not avail formal credit in 2023, an increase from 15% in 2022.

In terms of loan amounts, 40% reported a decrease in 2023 compared to 2022, while 28% saw an increase. A significant 41% expressed a desire to raise their borrowing limit.

Nearly eight out of 10 borrowers were satisfied with their formal lending experience. Looking ahead, 57% intended to take out a new loan in 2024, while 19% already had plans in place. Online channels were preferred by 56% of respondents, while 37% preferred offline channels.

However, there is room for improvement in customer experience, with 48% suggesting loan rates need improvement, 35% preferring a better repayment schedule, and 33% wanting more repayment methods.

The survey included 1,500 Filipino borrowers with formal or informal credit at the time of inquiry, ensuring a diverse representation of age, income, employment groups, and regions. Digido, the survey’s sponsor, offers inclusive lending solutions through its mobile app and website, aiming to provide convenient and secure financial tools for underbanked and underserved consumers.