Before the pandemic, the percentage of the Filipino population that was credit-visible had been on the rise. When COVID-19 hit, financial institutions shifted from a growth mindset to a more cautious and reactive mode, focused on managing their existing portfolios and ensuring that they didn’t become riskier as a result of the prevailing economic conditions and general uncertainty.
“Prior to the pandemic, financial inclusion in the Philippines had been increasing at pace. A greater volume of institutions sharing financial information had enabled more consumers to access a greater range of financial services and products. TransUnion’s priority when the pandemic hit was to ensure that services to our members and consumers remained business as usual even under lockdown, not only to honor our obligations but to really support them through the crisis,” said TransUnion Philippines president and chief executive Pia Arellano.
“The whole situation was unprecedented, and it impacted our members and potential members differently. Now that the Philippines and the global economy is looking to the future, it’s important that everyone focuses on growth and joining together to help recovery efforts,” she said.
Arellano said TransUnion believed that the key to recovery lies in regaining the growth mindset, backed by the power of information, as the country moves to recuperate from the economic impact of COVID-19.
Arellano said the increasing trend of the banked population and the extension of loans to entrepreneurs or consumers were derailed by the pandemic. “There are still tens of millions of Filipinos who are not credit-visible. They have limited access to credit products and other services,” she said.
Arellano said credit reporting agencies play a crucial role in enabling financial institutions with solutions to help identify trends and customer pain points, as well as understand credit history and predict likely future scenarios on the financial state of consumers and businesses.
“This helps lenders confidently make decisions, even in uncertain times, while predicting risk more accurately,” she said.
TransUnion, through its partnerships with various financial institutions like banks in rural areas, champions greater financial inclusion by bringing lenders into the wider credit information ecosystem.
This allows consumers with previously limited data in the system to be on the radar of both big and smaller banks looking to increase the provision of products and services. In the same way, lenders contributing data are also empowered to be more competitive in the industry because of the insights and technology solutions that they gain access to.
TransUnion noted that the prolonged lockdowns and subsequent rise in unemployment have affected people’s income and household finances and their capacity to meet credit obligations. While regulatory measures were put in place to manage the potentially negative impact on creditworthiness and, ultimately, individuals’ or businesses’ access to financial services, the situation called for innovative solutions that better respond to the prevailing challenges.
It also observed that as people have had to depend more on online transactions under pandemic restrictions, the demand for financial services that are obtained via digital platforms shot up.
“Financial institutions have had to commence or accelerate their digital transformation efforts to keep up with both the sudden market demand and the competition from fintech [financial technology] and other new players, all while dealing with the rise in attempted fraud cases during the pandemic, especially in the early days,” Arellano said.
She said TransUnion’s contribution has been the introduction of new core solutions that tackle old problems, in new forms, during the pandemic.
“For instance, it started harnessing the power of trended data and additional variables/attributes that expand understanding of consumer credit behavior. These have enabled businesses to continue and even extend support to previously unbanked consumers. It also launched its seamless onboarding solution which provides financial institutions with transformative digital capabilities while helping mitigate fraud before it happens. Such support reaps benefits that extend even beyond the challenges of the pandemic,” she said.
TransUnion’s advocacy for re-establishing a growth mindset to aid economic recovery is underpinned by the promise to help create a reliable basis for mutual trust between lenders and consumers. The goal is to keep empowering financial institutions to solve old problems in new and better ways.
“This stems from the fact that TransUnion sees information not just for what it can do, but for what it can help people achieve. It’s how we plan to do our part in the bayanihan efforts to recover from this crisis as one nation,” Arellano said.
She said that while 2020 forced shifts and developments in businesses, 2021 is the time to focus on sustainable growth and greater stability. Implementing and streamlining strategies for the digital space remains a key focus, she said, and providing access to convenient digital experiences is now what consumers expect.
While balancing risk is still necessary, a cautious return to rebuilding and lending to new customers is possible through informed decisions, she said.
“It is a monumental task, but the Philippines has proven its capacity to bounce back from crises stronger than before. TransUnion understands its unique position to provide data-backed guidance and technology solutions to help businesses and consumers make more informed finance decisions during these uncertain times and contribute to nation-building and the country’s eventual economic recovery,” Arellano said.
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