While there certainly are disadvantages if you are in a far-flung area in the Philippines, it turns out there could be a plus side to it, too!
Just recently, the Bangko Sentral ng Pilipinas (BSP) has chosen two rural banks located on the outskirts of Batangas City as the government’s first beneficiaries of satellite internet service.
The banks chosen were the Rural Bank of Cuenca and Progressive Bank of Malvar, both of which can be classified as banking institutions belonging to “geographically isolated and disadvantaged areas” (GIDA) as per BSP standards.
The choice of the two banks in Batangas was based on their location, being in rural areas, where internet connectivity is limited and only a few telecommunications facilities are available.
These institutions will be used to pilot test satellite internet service to be provided by iOne Resources, Inc., a trusted ICT systems integrator and managed solutions provider in the Philippines.
Still in its assessment phase, the test seeks to “evaluate the performance and reliability of satellite internet services under such conditions and also during different weather conditions,” the BSP statement said.
The project, which is being undertaken in partnership with the Department of Science and Technology-Advanced Science and Technology (DOST-AST) and the Philippine Space Agency (PhilSA), is expected to expedite the implementation of a multilateral cross-border payments connectivity as outlined in EO 127, series of 2021 entitled, “Expanding the provision of Internet services through inclusive access to satellite services, amending EO No. 467 (s. 1998) for the purpose.”
Promoting access to financial services in remote areas
While certainly a benefit to financial institutions beset by their disadvantageous location, the partnership between the two government agencies and the BSP appears to be also in line with the goal of the latter. That is, “to promote access to financial services in remote areas.”
BSP chief Felipe Medalla said that the plan to increase public investment on IT infrastructures and to involve private players so they can participate in satellite deployment can further boost digital financial services in the country.
Believing in the power of satellite technology in “enhancing connectivity in rural areas,” the BSP chief also gave credence to its extended ability to “promote greater financial inclusion in unserved and underserved areas.”
“We believe in the capability of satellite technology to enhance connectivity in rural areas,” he said. “This improved connectivity will expand the capacity of banks to provide digital financial services and promote greater financial inclusion in unserved and underserved areas.”
Internet connectivity as an enabler
Out of 1,634 municipalities in the country, the BSP reported that 33 percent or 533 municipalities still do not have bank branches operating within their areas.
In these areas, internet connectivity is recognized as a critical enabler of financial and economic inclusion as financial transactions and services start shifting to online platforms due to the pandemic.
The BSP is also promoting satellite technology for the banking industry. “For a disaster-prone country, banks, particularly those located in the rural areas, should have satellite internet to improve the chance of quickly restoring operations after a calamity such as a typhoon,” the BSP chief said.
The Philippine central bank has since supported Executive Order No. 127, which was issued in March 2021 to expand internet connectivity via satellite services.
The EO’s implementing rules and regulations (IRRs) were issued in September last year by the Department of Information and Communications to guide banks, fintech companies and other financial sector entities about the use of satellite technology for their operations.
The BSP is now also proposing that as part of the EO’s IRR, banks or a consortium of banks, in partnership with local financial service providers, should be allowed to set up their own satellite broadband for digital or branchless operations.