The Philippine rural banking system has been instrumental in bringing banking services to the countryside, reaching out to the thousands of Filipinos commercial banks cannot reach. With 2,133 offices as of December 2008, the rural banking sector has become a key partner of countryside development and the growth of rural communities.
In 2009, BSP Governor Amando Tetangco acknowledged the rural banking sectors innovative efforts to reach out even more. He sited that rural banks are exhibiting greater innovation and dynamism be seizing opportunities presented by technology.
Leading rural banks have rolled-out the GCash applications to enhance its services and reach the unbanked countryside. Included in the list of 47 banks who have given these applications are try are GM Bank and PR Bank
PR Bank: Innovative solutions
Philippine Rural Banking Corporation (PR Bank) is the biggest rural bank in Region II and one of the largest nationwide. The bank was one of the first who tried the Mobile Phone Banking Services (MPBS) offered supported GXI.
First Step: Try the one new service on own operations
However, they did not roll-out all the offered services all at the same time. To test the viability of the service., PR Bank started with Text-a-Sweldo and disbursed the salaries of its 1.200 employees through their mobile phones. Although initially hesistant, the employees now prefer to recieve their salaries through this service, since it allows them to easily send the cash to the cellphones of their family members who are located far away.
Next: Roll out other services to customers
After the initial phase, PR Bank rolled out the other GCash mobile banking services to its customers. Soon, other services such as Text-a-Remittance, Text-a-deposit and Text-a-withdrawal services.
However, to make the initiative a success, authorized cash-in and cash-out merchants had to be in place. These merchants had to be numerous and accessible to bank clients who are based far away from the bank branches. To do this, PR Bank fielded its own people to recruit and train new merchants and establishments into the GCash Eco
system. Close to a hundred businesses now accept electronic transactions. Employees can walk up to stores, restaurants and shops and pay for their purchases using their cellphones.PR Bank Best Practices with GCash
- Cross-selling of products with GCash MBPS
Most rural banks cannot offer payroll facilities because (1) they do not have ATM services through which employees can withdraw their salaries and (2) most salaried employees in the countryside cannot afford the maintaining balance required to maintain a payroll account.
With GCash's Text-A-Sweldo service, rural banks can support local companies' payroll services without requiring employees to open ATM payroll accounts, because the salaries can be credited directly to employees' mobile phones. Employees can immediately send e-cash to loved ones or to pay bills without having to make another trip. E-cash can again be withdrawn through nearby authorized merchants.
With this new service in place, PR Bank found that it could now improve repayment rates for SALARY LOANS local companies. Since the payroll now goes through the bank, they can now deduct the payment the salaries before they disburse via Text-a-Sweldo. They can now easily market the Payroll Service and Salary Loan together. Better repayment means better revenue, possible higher loan approval rates and lower loan interest rates for the customers in the future.
- Reduced payroll disbursement period
Through the Text-a-Sweldo service, PR Bank was able to reduce a large client's payroll disbursement period from 5 days to 1. We can infer that this client may have been using tedious traditional methods of sending remittances through various remittance facilities, or sending checks to their employees every payroll period. However the procedure, their old system may not have been centralized. With the Text a Sweldo service, the company can just send the list of all the employees with corresponding mobile numbers and amount to be credited, and PR Bank can send the funds instantaneously. - Retailers just deposit their earnings through Text-a-Deposit
Remember the merchants PR Bank recruited to ensure their new MPBS would work? All these merchants now send their earnings to their accounts in PR Bank through the Text-a-Deposit facility. No more traveling to bank branch and lining up needed
GM Bank is a merger of four banks, making it one among the leading rural banks in Central Luzon. With 31 branches, GM Bank has one of the largest branch networks in the region.
GM Bank was recognized this year by the Microenterprise Access to Banking Services (MABS) program not only for outstanding performance in microfinance, but for other special points that made their banks stand above the rest. Among those strong points was the bank's focust on customer services, having product reviews and modiying products based on product research, and its commendable use of technology to improve its operations.
The use of GXI's MPBS plays a key role in GM Bank's accomplishments. The bank is currently offering all the available mobile phone services from GXI to its customers.
GM Bank Best Practices with GCash
- Reaching out to depositors from far away
An example of successful application of MPBS is GM Bank's Laur Satellite Office (or Other Banking Office, or OBO). With 5,500 households and 30,900 residents, Laur
serves as an ideal place to accommodate both existing and potential bank clients.
The Laur OBO, with the help of the MPBS gave the residents easier access to banking services. Before the OBO, the people of Laur had to travel 15 kilometers and spend anywhere from P45 to P150 just to make a deposit, withdrawal, or any other bank transaction.
The Laur OBO acts as the nearest cash-in and cash-out merchant in the area. As with PR Bank, GM Bank's Laur OBO uses the Text-a-Deposit and Text-a-withdrawal services to eliminate the hassle and expense of traveling all the way to Palayan to make these basic transactions.
The OBO started with just two registered Text-a-Deposit users in 2008. To date, the satellite office already serves both regular an microfinance clients. Such improvements have also been felt at the GM Palayan Branch. To date, 70% of the banks' depositors are Text-a-Deposit and Text-a-Withdrawal users. - Safer cash collection operations
The area's Microfinance Account Officer (AO) uses the GCash services to "cash-in" all his collections for the day, and sends it electronically to the Laur OBO e-wallet. He need not physically travel with the cash to Palayan just to remit. This procedure is preferred as the AO need not worry about safekeeping the cash collections throughout the 20 minute trip to Palayan. - Making salaries easier to access
The Laur OBO's security guard, Catalino Vargas, has also benefitted from the Text-A-Sweldo service. Vargas' agency, D'Priest Security Services, is Cabanatuan-based, which then requires Vargas to travel there from Nueva Ecija just to claim his salary. Making these trips costs Vargas P120 every payday. With the Text-a-Sweldo service D'Priest has availed of, Vargas no receives his salary through his mobile phone. He conveniently cashes-out the money at the Laur OBO where he is based.
This is just one of the countless examples of how GM Bank is using the Text-A-Sweldo service to help local businesses manage their payroll.
Tetangco, Amando Jr., (2009), Banking on Governance for Growth and Stability, Speeches, Website: http://www.bsp.gov.ph/publications/speeches.asp?id=357&yr
GCash Paves the Way for PR Bank's Micro-financing Success, retrieved from Globe GCash website, Website: http://gcash.globe.com.ph/contentgrouppagearticle.aspx?secid=26&cgid=7&id=103
GM Bank, http://www.gmbank.com.ph
Banking (2009), GM Bank eyes fourth consolidation in Region 3. Website: http://www.philstar.com/Article.aspx?articleid=43314
Mobile Phone Banking for Clients of Rural Banks, Website: www.mobilephonebanking.rbap.org
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