Six in 10 Filipinos diligently pay their loans as access to formal credit remains high.
These are the highlights of the latest insights of survey commissioned by consumer finance firm Digido.
The survey covering 1,500 Filipino borrowers and done in October 2023, showed 8 in 10 Filipinos believe formal credit options have been more accessible.
About 76 percent of Filipino borrowers are satisfied with their experience from formal lending institutions.
Preference to formal credit was due to easy application process (60 percent), convenient repayment methods (50 percent) and high probability of approval (47 percent). Other positive factors include convenient repayment schedule (43 percent), application through mobile app (42 percent) and attractive interest rate (30 percent).
The survey showed 57 percent 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 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);
Assessing their payment habits in 2023 compared to 2022, 64 percent of surveyed Filipino borrowers self-report that they always pay their loans on time, whilst 36 percent 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 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 formal credit in 2023, an increase from 15 percent in 2022.
In terms of the amount of loans availed, 40 percent of respondents report th 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 percent. Moreover, 41 percent of respondents would like to raise the borrowing limit, indicating a significant portion of demand.
About 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. 38 percent, meanwhile, indicate they will avail a loan if the need arises. Notably, 76 percent of Filipino borrowers are satisfied with their experience from formal lending institutions.
Around 56 percent of respondents also cite online as their preferred channel for obtaining formal credit, compared to 37 percent for offline channels. Demand for online channels is highest in the National Capital Region and the middle income group, likely due to the higher standard of living and degree of digitization.
Room for improvement in terms of customer experience for all formal credit institutions remains, with 48 percent of respondents also stating that loan rates need improvement, 35 percent preferred a better repayment schedule, and 33 percent would like to use more repayment methods.
