Filipinos Look To Take Greater Charge of Personal Finances as National Economy Continues Recovery

• Despite slightly worsened household financial situations reported, economic improvement is gradually lifting consumer sentiment, with more Filipinos optimistic of their personal finances changing for the better in the next year
• More Gen Z Filipinos seek greater access to credit through cards, loans, and Buy Now Pay Later services
• As fraud continues to threaten Filipinos’ financial health, more consumers are wary of the risks of identity theft

Manila, Philippines, July 25, 2023 – Findings from the latest quarterly Consumer Pulse Study by global information and insights company and the Philippines’ first comprehensive private credit reference agency, TransUnion (NYSE: TRU), show that Filipinos are optimistic of their financial situations changing for the better amid the country’s continued economic upturn.

Alongside improved consumer sentiment, Gen Z Filipinos were the demographic with the biggest increase in in-store and online purchases as well as plans to increase non-essential spending. Younger Filipinos also led an increased understanding in the importance of credit monitoring, with report accuracy the top factor for doing so amid the lingering threat of fraudulent schemes targeting consumers.

Economic recovery boosts consumer attitudes towards household finances

Despite the economic recovery observed in 2022 and a continued expansion of the Philippines GDP to 6.4% in Q1 2023^[1], household finances did not keep pace. The percentage of respondents reporting worse than planned household financial situations increased to 27% in Q2 compared to 25% in Q1. Respondents who were earning higher income in the past three months also decreased from 45% in Q1 to 41% in Q2.

Even with slightly worse household finances reported among respondents, an improving economy buoyed consumer sentiment – with the percentage of consumers optimistic about their household finances in the next year up from 81% in Q1, to 84% in the latest survey. The improvement in the economy as well as consumer confidence also showed in the number who expected to be better able to meet their debt obligations. More than half (59%) said they expected to be able to pay at least one of their current bills or loans in full, a four-percentage point improvement over last quarter.

Improved consumer sentiment influenced spending as well. On the topic of how consumers expected their household spending to change over the next three months, 31% indicated they plan to increase it – up two percentage points compared to Q1 results. There was also a notable increase seen in the percentage of consumers who reported same or increased in-store and online purchases, tallying 61% in Q2, a two percentage point increase from Q1.

“Survey results showed that Gen Z consumers were seen to have the highest increases in both purchases made and plans to increase discretionary spending,” said Pia Arellano, president and CEO of TransUnion Philippines. “With the momentum of the economy and relaxed COVID-19 restrictions, there are now more avenues for younger Filipinos to allot their finances beyond paying for necessities. These changing spending habits could also give insight into their attitudes towards credit as well.” 

Gen Z leads charge for new credit product applications

While the percentage of consumers planning to apply for a new credit card remained unchanged, there was a decrease in consumers planning to apply for a personal loan – down from 52% in Q1 to 46% in Q2. Rising interest rates were one of the reasons given as impacting consumers’ decisions to apply for credit in the next year, with 84% of consumers saying rises were moderately or highly likely to impact their decision to apply for credit, up two percentage points from the previous quarter. 

Despite the negative impact of rising interest rates, there is a growing percentage of Gen Z consumers who see credit as an important financial tool. Among Gen Z consumers, 68% said that access to credit and lending products is extremely or very important to be able to achieve their financial goals, jumping three-percentage points from Q1 findings.

Gen Z consumers also demonstrated a strong desire to apply for new credit as well. Compared to Q1 results, more (a 10-percentage point increase) Gen Z consumers were planning to apply for a new credit card, more (a four-percentage point increase) for a new personal loan, and more (a three-percentage point increase) for a new Buy Now Pay Later (BNPL) product. These figures show a contrast to the reduced desire of some other generations to apply for new credit products.

Younger consumers place high importance on credit monitoring

More consumers recognized the importance of monitoring credit reports as 41% of respondents saw this as “very important” in Q2. These findings mark a six-percentage point increase from the previous quarter. Among reasons why respondents checked their reports, report accuracy was seen to be the top factor at 61%, jumping nine-percentage points higher than in Q1.

“Credit understanding and effective management are key elements of financial health. Being knowledgeable about the state of your credit is a fundamental part of being an informed consumer,” said Arellano. “Insights from our study show younger consumers increasingly engaging with the value of credit monitoring services. This is a positive sign that Filipinos are looking to take better control of their finances, ultimately enabling them to gain greater access to and responsibly use credit to unlock increased economic opportunities.”

Among different credit products, consumer awareness towards BNPL services continued to increase, with 21% of respondents using a BNPL service once in the past year, up three percentage points from last quarter. In terms of population demographics, awareness of BNPL services grew the most among Gen Z, up from 77% in Q1 to 80% in Q2. Increases were also seen in other demographics as well, except for Baby Boomers whose awareness decreased from 78% in the previous quarter to 73% in Q2.

More Filipinos cautious of identity theft

Fraud attacks continue to be a major threat to consumers as 69% of respondents reported being targeted by a fraud scheme, up three-percentage points from Q1. Among fraudulent schemes targeting consumers, phishing emerged as the most common tactic used, with 52% of consumers saying they were targeted by this method in the past three months.

At 88%, almost all respondents expressed concerns on sharing personal information. When asked on the reasons for their concerns, 80% of respondents cited invasion of privacy, unchanged from the previous survey period. However, 76% of respondents reported the risk of identity theft, up five percentage points from the previous quarter.

“When your personal information is exposed to malicious individuals out to exploit your finances, the potential negative implications are significant,” said Arellano. Organizations must also take definitive measures to safeguard the personal information and hard-earned finances of their customers. The sooner a case of identity theft is spotted, the more likely will fraud be prevented. At TransUnion Philippines, we provide a host of identity proofing and fraud solutions for businesses and consumers to help make trust possible – only by coming together can we more effectively combat fraudsters.”

TransUnion’s Consumer Pulse Study surveyed 907 consumers in the Philippines from May 4-19, 2023. This quarterly survey examines shifting consumer attitudes and behaviors based on the dynamics of income, debt, and identity theft, with respondents ranging from Gen Z (born 1995-2004), Millennials (born 1980-1994), Gen X (born 1965-1979), and Baby Boomers (born 1944-1964). For more information, please view the full report of the Consumer Pulse Study.

^[1] Philippine Statistics Authority | Republic of the Philippines (psa.gov.ph)