BSP sees need for new credit norms to evaluate gig workers

DEEZY/PIXABAY

FINANCIAL INSTITUTIONS should consider alternative data beyond the usual credit scoring techniques following the rise in the number of gig-economy workers, a central bank official said.

“We’re seeing a trend of more and more millennials not going into the employed sector, but choosing, in fact, not even choosing, maybe by circumstance, they are forced to go into the gig economy,” Ellen Joyce L. Suficiencia, director of the Center for Learning and Inclusion Advocacy of the Bangko Sentral ng Pilipinas (BSP), said in a webinar hosted by Malaysia-based FintechNews Wednesday.

“That also poses a challenge, because our financial service providers are only relying on typical payroll-based solutions and positioning… that will definitely be a huge exclusion factor moving forward,” she added.

Ms. Suficiencia cited data from the Credit Information Corp. indicating that less than 50% of the adult population has a credit record. She said that lack of verifiable Know-Your-Customer documentation from prospective borrowers prior to the national ID implementation was also a challenge.

She said policymakers are flying blind due to limited granular data on other categories like farmers and the micro-, small-, and medium-sized enterprises.

“It’s easy to look at these groups as homogenous and not recognizing that within these groups there are sub-categories with distinct challenges. So I think that’s important to recognize these data from a regulatory perspective,” she said.

Dev Dhiman, Asia Pacific managing director at data intelligence firm GBG PLC, said credit access is harder for the unbanked including farmers and rural residents, and even young people that are trying to borrow for the first time.

“We see this in lots of the emerging markets in Southeast Asia — the people who get credit are the ones who have credit before, because they have the formal history. This is why alternative data is hugely important” Mr. Dhiman said.

Paolo Azzola, chief operating officer at PayMaya Philippines, Inc. said merchants and not just consumers should also be the focus for broadening financial inclusion.

“If you only have the consumer side and not the demand or merchant side, then it’s really difficult to close the loop of financial inclusion. If you have both sides working at it together, that’s really powerful,” he said.

He said PayMaya has started to go into lending this year, tapping data from sari-sari stores that are already remittance agents or providers of bill payment and mobile phone load services through channels like Smart Padala.

Bank of the Philippine Islands (BPI) Chief Risk Officer Marita Socorro D. Gayares said the bank hopes to capture rural areas where credit gap remains significant. Since 2019, she said the bank has provided credit to about 145,000 self-employed and microentrepreneurs through BPI Direct BanKo.

“We’re in the smaller municipalities. It’s because that is where we need to back the informal segment of our society,” Ms. Gayares said, noting the bank is looking forward to partnering with fintechs to bridge the credit gap. — Luz Wendy T. Noble

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