From Pesos to Lives: How Purchasing Power Builds Lives of Filipinos Around the Country

Financing Better Lives for Every Filipino

Loans have been around since the birth of human civilization, serving very noble purposes of people to assist neighbors in emergencies, for their shops and trades, and to aspire for and help achieve success and ambition. Surely the greatest achievements of mankind would never be without the financial assistance of communities.    

It is difficult to imagine therefore that whole communities in modern times are not sufficiently served by financial institutions. For many years, access to financial services has been difficult for many Filipinos.  In order to avail of loans or credit cards from banks, one would have to fall within an income bracket that is unattainable for regular folk receiving minimum wage or those who are part of the “endo” or contractual workforce.  To begin with 77.4% of Filipinos do not have bank accounts.  This has gravely limited the options for the regular Juan who needs to replace old dilapidated furniture or for Juana who is considering opening a small home business to supplement his meager salary, or for Pilar who needs a new stove to improve service in her small carinderia.  Juan, Juana and Pilar won’t normally qualify for bank loans and thus, will have to find creative, sometimes very costly and even complicated, financing options that in the end won’t even leave them better off. In the worst cases, they may even be in a deeper hole from where they began.

 

Opening a world of possibilities

In recent years, however,  a new fintech arena has opened up possibilities for delivering specific loans and other financial products on a mass scale to ordinary folk. The loans may be helpful for small businesses or for a family or individual’s purposes.  Mobile and digital technologies are making this possible. With just a smartphone and good WiFi or data signal, anyone can log in, fill in the necessary information, wait a couple of days, or for some, just a few hours, and, just like that, the funds are deposited to ones account.  Not only does it simplify lives, it also thetime and effort spent commuting to the bank, meeting with loan officers, filling out long forms and submitting piles of requirements — transaction costs that are disproportionately high for the lower income group. 

 

Making even the basic better

Cashalo’s basket financing product Cashacart has extended  loans to many for their daily needs like groceries. It has also helped improve living standards allowing funds for the purpose of buying larger items like a new bed to replace the old rickety one or a dining table that can now seat everyone.  Though these things may seem basic, they’ve allowed families to bond over a shared meal, or to have a more restful sleep.  

Beyond daily needs or basic home furnishings, many of Cashacart’s customers avail of financing to purchase supplies and equipment for their small businesses. They’ve found Cashacart’s easy loan process more attractive than any small business loan from the bank. There’s that carinderia owner who was able to buy a bigger rice cooker.  Or the online English tutor who was able to buy a better WiFi router. Or even the home transcriber who was able to upgrade her laptop. Thanks to their loan, these people were able to increase their income and thus improve their lives and the lives of their families.

 

Fintech as a boost to the financial sector

The vast majority of Filipinos living without access to basic banking services either because of proximity or life situation are now also within the reach of banks, previously unable to serve them due to the high costs of establishing brick and mortar branches. 

While it is true that in its most basic purpose, financial service companies have provided services that support vital sectors of our economy, the new fintech companies like Cashalo are now allowing the same banks and FIs to take great leaps in delivering the last mile in financial services, placing the financial transactions in the hands of the people, improving lives for Filipinos wherever they may be.