Gen Zs Need Greater Access to Finance to Help Philippines Grow
TransUnion Philippines research from Feb. 2022 shows that although 94% of Gen Z Filipinos believe that access to credit and lending products is important to achieve financial goals, only 35% of them report having sufficient access.
Born between 1995 and 2004 for our survey purposes, Generation Z is becoming an increasingly important driver of economic growth. They comprise one-quarter of the world’s population–that’s about 2 billion–and an even greater percentage (40%) of the Philippines’ population at 40 million.* They are dynamic digital natives with a voracious appetite for information and staying connected and updated. Not surprisingly, close to 99% of Gen Zs have access to a smartphone connected to the internet and around 73% of them spend much of their time online.**
With Gen Z in ascendancy, it’s important to ask what makes them tick? What keeps them busy online? Where do they choose to spend their money? How has the global pandemic changed their money management habits and do they have sufficient access to credit to achieve great things?
Providing insight into Gen Z Filipinos and other generations, the TransUnion Consumer Pulse Study***is conducted quarterly and measures the attitudes and behaviors of consumers in the Philippines and in other international markets. Its results help organizations plan products and services that can better serve consumers’ financial needs and better understand their motivators and how they conduct their personal finances.
According to TransUnion’s research, exactly half of Gen Z consumers plan to apply for new or refinance existing credit in the next year, in particular, by applying for a new personal loan (47%), a new mortgage, home loan or bond payment (37%), or a new credit card (35%). This reflects an opportunity that credit providers can address. Access to credit is an important step in everyone’s financial journey. In the long-term, effective access to credit helps build loyalty, improve financial inclusion in the country and can act as a catalyst for economic growth.
Consumer awareness and interaction with credit is increasing
In the Philippines, consumer attitudes to credit are changing. The same TransUnion study found that 88.6% of Filipinos believe in the importance of credit monitoring, and 48% agree that their credit scores would improve if financial institutions accounted for non-standard information such as rental payments and buy now, pay later loans as part of the assessment of their credit score.
The study also found that Gen Zs in the Philippines said they spent their money from Nov. 2021 to Feb. 2022 on adding or expanding digital services (35%) and adding to their subscriptions/memberships (24%). In addition, 30% stated they increased their discretionary spending (dining out, travel, entertainment), while 28% cut back on it. These shifts are, in part, due to the ongoing global COVID-19 pandemic but are also a reflection of the needs of this increasingly financially active generation.
In terms of financial management, also a carryover of the pandemic, Gen Zs have prioritized paying off debts and building up their savings. This is evident in the 56% who said they decided to save more in their emergency fund, 30% who stated they paid down debt faster and 28% who claimed they saved more for retirement from Nov. 2021 to Feb. 2022. Forty-seven percent of Gen Zs said they will use their money from savings to pay their current bills and loans and 33% plan to borrow money from friends or family for that purpose. Despite about half of Gen Z expecting to be unable to pay some of their debts, they are trying to come up with ways to do so eventually; 36% of them plan to at least pay partial amounts on their existing accounts, 13% plan to request for a payment holiday or other accommodation from lenders and 10% will refinance or renegotiate payments/rates.
"The disaggregated data from our quarterly Consumer Pulse Survey allows us to gain valuable insight on the trends in saving, spending, and overall consumer habits of Filipino Gen Zs. The information we gather can help different organizations and institutions better tailor-fit products and services for this very mobile and tech-savvy generation," said Pia Arellano, CEO and president of TransUnion Philippines.
* Ng, J. (2022). Brands Get Ready: Gen Z Are Growing Up. Retrieved 24 May 2022, from https://www.pana.com.ph/fyeo/materials/Engaging%20Generation%20Z_PANA%20.pdf
** Wise, J. (2022). Gen Z Statistics 2022: How Many People Are In Gen Z?. Retrieved 24 May 2022, from https://earthweb.com/gen-z-statistics/
*** Online survey of 1,078 adults in the Philippines conducted Feb. 8–23, 2022
TransUnion is a global information and insights company that makes trust possible in the modern economy. We do this by providing an actionable picture of each person so they can be reliably represented in the marketplace. As a result, businesses and consumers can transact with confidence and achieve great things. We call this Information for Good®. TransUnion provides solutions that help create economic opportunity, great experiences and personal empowerment for hundreds of millions of people in more than 30 countries.
In the Philippines, we were the first comprehensive private credit reference agency (CRA) and we have helped Filipinos to better understand and manage their personal finances for more than a decade. We serve a range of clients across multiple sectors, including international, national and rural financial services providers, telecommunications, utilities, FinTech and retail organizations.