According to the data from consumer financing company Digido, formal credit options became more accessible to 8 out of 10 Filipinos in 2023.
Among these, 42% experienced consistent accessibility, while 38% noticed an improvement compared to 2022. The survey’s 1,500 respondents highlighted ease of application (60%), convenient repayment methods (50%), and high approval rates (47%) as key influences in choosing formal credit.
Filipinos showed a trend of borrowing from both formal and informal sources. The Digido survey saw 57% had outstanding loans from formal lenders, primarily from non-bank financial institutions (31%), traditional banks (25%), digital banks (14%), offline NBFIs (13%), or traditional banks’ apps/websites (9%). Also, 48% borrowed from friends or family.
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Factors such as easy application (60%), convenient repayments (50%), and high approval rates (47%) led individuals to opt for formal credit in 2023. Other positive influences included favorable repayment schedules (43%), mobile app accessibility (42%), and attractive interest rates (30%). These preferences remained consistent across income brackets and regions.
Regarding payment habits, 64% claimed they always paid on time, while 36% admitted missing repayments in 2023. Personal loans were the most popular choice (54%), valued for their flexibility, followed by ‘Buy now, pay later’ (12%), credit cards (6%), and business loans (6%). Surprisingly, 24% didn’t access formal credit in 2023, up from 15% in 2022.
Increase in loan amounts
While 40% reported reduced loan amounts in 2023 compared to the previous year, 28% saw an increase. Also, 41% desired higher borrowing limits, indicating considerable demand.
Satisfaction with formal lending was high, with 76% expressing contentment. Looking ahead, 57% plan to take out a new loan in 2024, 19% have plans in place, and 38% would consider it if necessary.
Preference for online channels (56%) over offline (37%) was notable, especially in the National Capital Region and the middle-income group, likely due to better living standards and digitalization.
Improvements are sought across formal credit institutions: 48% seek better loan rates, 35% desire improved repayment schedules, and 33% want more repayment methods.