Manila, Philippines, October 22, 2026 – TransUnion (NYSE: TRU), a global information and insights company and the Philippines’ first comprehensive private credit reference agency, today released additional findings from its 2026 Credit Perception Index (CPI), providing insights for the first time on how Filipinos across the country’s three major island groups¹ perceive and engage with credit.

Introduced in 2023, the CPI examines Filipinos’ knowledge, trust, and favorability toward credit and other financial products, including the factors that influence their attitudes, behaviors and financial decisions, with the goal of supporting broader financial inclusion in the Philippines.

The findings show that credit perception held or improved in Luzon, Visayas and Mindanao, suggesting that broad-based progress is being observed across the country rather than concentrated in specific regions.

The Philippines’ 2026 CPI score, reflecting the general population, rose to 75 out of 100 (+2 points from 2025), the highest since the study began in 2023. Comparing the three island groups, all recorded improved or stable CPI scores in 2026. Mindanao posted the biggest gain, rising to 77 out of 100 (+3 points), while Luzon, including the National Capital Region (NCR), increased to 74 (+1 point) and Visayas remained stable at 75.

Mindanao’s improvement was driven by gains across six out of seven score factors*, including product knowledge (+7 points), favorability (+6 points), stigmas (+5 points), product trust (+4 points), as well as credit messaging and reservations (both +3 points). Similar patterns were observed in Luzon and Visayas, where most score factors improved or remained stable. In Luzon, five of seven score factors improved, while in Visayas, softer credit messaging and reservations were offset by gains in product trust and knowledge.

“It’s encouraging to see credit perception improved across the country this year. Every island group held or improved its score, which tells us that consumer confidence and knowledge in credit is building broadly — not only in and around the capital. That kind of nationwide progress is a strong and positive signal toward greater financial inclusion,” said Peter Faulhaber, President and CEO of TransUnion Philippines.

Shared Financial Priorities Across Island Groups

Perceived financial situation across island groups broadly reflected the general population, with some regional variation: a larger share in Mindanao identified as lower income (33% vs. 28% of the general population), while more in Visayas placed themselves in the lower-middle bracket (60% vs. 47% of the general population).

Amid a more cautious economic climate in 2026, shaped by elevated prices, Filipinos across all three island groups planned to take a proactive approach to their finances over the next three months. Saving more was the most common planned action in every island group (Luzon: 86%; Visayas: 87%; Mindanao: 86%). Accessing more educational materials to improve their finances ranked second in each (Luzon: 71%; Visayas: 74%; Mindanao: 77%), followed by exploring new digital products and FinTech services (Luzon: 69%; Visayas: 71%; Mindanao: 73%) and using a greater range of financial services and products (Luzon: 63%; Visayas: 66%; Mindanao: 72%).

Intent to use credit, however, was where the island groups diverged. More than half of Filipinos in Mindanao (54%) intended to borrow or use credit for purchases in the months ahead, 11pp above the general population (43%). The figure was 42% in Visayas and 40% in Luzon.

FinTech Use is Widespread, but Product and Learning Preferences Vary by Region

Consistent with the general population (93%), the majority of Filipinos across the three island groups were FinTech users, with Visayas seeing the highest adoption at 96%, followed by Mindanao at 95% and Luzon at 92%. eWallets, digital banks and online payment apps were the three most widely used FinTech products in every island group.

Visayas recorded strong eWallet use at 85%, four percentage points above the general population (81%), while Mindanao showed higher uptake of digital banks at 57%, five points above the general population (52%).

Where Filipinos preferred to learn about financial products followed a similar regional pattern. Social media led in every island group (Luzon 57%, Visayas 69%, Mindanao 64%), with e-learning platforms among the top three everywhere (Luzon 49%, Visayas 52%, Mindanao 50%). The third channel differed by region: banks and financial institutions ranked high in Mindanao (53%), while family and friends completed the top three in Luzon (44%) and Visayas (50%).

From Broad Progress to Inclusive Participation

Two years ago, TransUnion’s Credit Perception Index found Filipinos outside the capital lagging behind in how they viewed credit. This year, the first regional view shows credit perception holding or improving in Luzon, Visayas and Mindanao alike. Filipinos in different parts of the country engage with credit, digital tools and financial information in their own ways, and meeting them where they are is how that progress becomes lasting financial inclusion.

“There is no one-size-fits-all approach to advancing financial inclusion. Understanding local needs and behaviors through more granular insights can help stakeholders develop solutions, education initiatives and engagement strategies that resonate best with communities – which is how broad progress becomes genuine, inclusive participation,” said Faulhaber.

In the Philippines, TransUnion works alongside financial institutions, government and industry partners to expand access to financial services and support broader financial inclusion. Its solutions help lenders assess consumers with limited credit histories using alternative sources of information, while initiatives such as the Fraud Industry Council, launched in 2024, strengthen information-sharing and collective action against fraud.

TransUnion’s Credit Perception Index (CPI) is an annual study conducted exclusively in the Philippines that tracks how Filipinos perceive and engage with credit, the drivers and barriers influencing their behavior, and the implications for the broader financial ecosystem. The 2026 study surveyed 1,000 consumers from May 6-26, 2026.

For more information and insights, please view the full report of the TransUnion Credit Perception Index study.

*The CPI Score Factors

1. Reservations – Concerns or barriers that may discourage credit use.
2. Stigmas – Negative perceptions associated with credit.
3. Credit messaging – The likelihood to use credit after learning about its potential benefits.
4. Favorability – Overall positive perceptions of credit products.
5. Product trust – The perceived trustworthiness of credit products.
6. Concept knowledge – Self-reported knowledge of a defined concept of credit.
7. Product knowledge – Self-reported knowledge of specific credit products.

Higher scores are more favorable across all factors. Stigmas and Reservations are reverse-scored, meaning higher scores indicate fewer negative perceptions and reservations toward credit.

¹ The Philippines’ three major island groups comprise Luzon (including the National Capital Region), Visayas and Mindanao.

Manila, Philippines, August 19, 2026 – TransUnion (NYSE: TRU), a global information and insights company and the Philippines’ first comprehensive private credit reference agency, today released its fourth annual Credit Perception Index (CPI). The Philippines’ 2026 CPI score rose to 75 out of 100, the highest level recorded since the study was launched. The increase was mainly driven by improvements across three score factors: favorability (+4 points), product trust (+3 points) and product knowledge (+3 points).

TransUnion CPI Score and Score Factors* of the General Population

Introduced in 2023, the CPI examines how Filipinos perceive and engage with credit, including the factors that influence their attitudes, behaviors and financial decisions, with the goal of supporting broader financial inclusion in the Philippines.

Beyond the record-high CPI score, the study found that financial confidence softened amid inflation and cost-of-living concerns, even as consumers took proactive steps to strengthen their financial wellbeing. The findings also point to growing momentum for digital banks, shifting borrowing preferences toward formal financial institutions and clear factors that influence consumer trust.

“What stands out this year is that confidence in credit continued to improve even as consumers faced a more challenging economic environment,” said Peter Faulhaber, President and CEO of TransUnion Philippines. “With household budgets remaining under pressure, we might have expected consumers to become more hesitant. Instead, we're seeing greater trust, familiarity and willingness to engage with formal financial products. That signals a maturing credit market and creates new opportunities to expand access responsibly.”

This growing engagement was reflected in continued increases in financial product adoption. eWallets remained the most widely held product at 80%, up four percentage points [pp] from 2025, while buy now, pay later (BNPL) services recorded the strongest growth in adoption (+8 pp), reaching 26%. Credit card ownership also increased to 38% (+7 pp), with personal loan adoption reaching 26% (+1 pp).

Financial Products Owned by Filipinos

Financial Confidence Softens, but Consumers Remain Proactive

While attitudes toward credit improved, Filipinos remained cautious about their broader financial outlook. Expectations of financial improvement fell to their lowest levels since 2023, with 64% of consumers expecting their financial situation to improve over the next three months and 73% over the next year, both down three percentage points from 2025. Inflation, rising living costs and energy prices remained the leading concerns affecting future financial wellbeing.

Future Financial Outlook in the Next 3 and 12 Months

In response to these pressures, Filipinos continued to take proactive steps to strengthen their financial wellbeing. Saving remained the most common planned action (86%, +2 pp), while more consumers also intended to access educational materials (73%, +5 pp), explore new digital products and financial technology (FinTech) services (70%, +6 pp), and use a broader range of financial products and solutions (66%, +6 pp). More than two in five (43%, +5 pp) also said they intended to borrow or use credit for purchases in the near future, continuing an upward trend observed since 2023.

“The survey reveals a shift toward more intentional financial decision-making among Filipinos,” Faulhaber noted. “While consumers are more cautious about their financial outlook, they are continuing to save, seek financial education and explore new financial products. These behaviors demonstrate how consumers are proactively adapting to ongoing cost pressures.”

Digital Banks Gain Momentum and Borrowing Preferences Continue to Shift

Credit continues to play an important role in helping Filipinos address everyday financial needs. Emergency expenses (59%), personal expenses (50%) and family expenses (45%) emerged as the most common reasons consumers used credit products and services.

At the same time, borrowing preferences continued to shift toward formal financial institutions. Future borrowing intent increased most for digital banks (+11 pp), followed by traditional banks (+8 pp) and credit cards (+6 pp), while intent to borrow from family and friends declined by 11 percentage points to 45%, reaching its lowest level since 2023.

Borrowing intent

The growing preference for digital banks appears to be supported by rising consumer familiarity and confidence. More than half of Filipinos (52%) reported using a digital bank. Digital banks also recorded the strongest gains in consumer perceptions, with knowledge increasing 15 percentage points to 80% and favorability rising 14 points to 79%, surpassing traditional banks on both measures (at 78% and 76%, respectively). Perceived safety of digital banks also climbed 11 points to 84%, second only to traditional banks at 88%.

Education is Key to Further Credit Adoption

Looking ahead, sustaining positive credit perceptions and supporting further adoption in the Philippines will require continued effort to build consumer knowledge and trust. Amid ongoing public and private initiatives to promote financial education, Filipinos reported that access to clear information still remains a challenge. One in four Filipinos (25%) reported difficulty finding materials related to credit and financial products. Among them, uncertainty about which sources to trust (60%) and information that was too complex or confusing (44%) were the most commonly cited barriers.

The study also revealed the factors most likely to strengthen trust in financial products and services. Transparency (56%), fair or low interest rates (53%), and strong security and fraud protection (52%) emerged as the leading trust drivers among Filipino consumers.

“Our Credit Perception Index underscores an important reality: consumers are increasingly seeking access to formal and digital financial services, but broader financial inclusion requires a coordinated effort to provide clear product information, strengthen financial education and safeguard consumer protection,” said Faulhaber.

“At its core, financial inclusion begins with information inclusion. Through responsible data sharing, we can help more consumers access the formal financial system and enable lenders to make better-informed decisions, paving the way for a more inclusive and financially resilient Philippines.”

In the Philippines, TransUnion advances financial inclusion through collaborations with financial institutions, regulators and wider industry stakeholders. The company helps lenders assess consumers with limited credit histories using alternative data and promotes industry-wide fraud prevention exchange through the Fraud Industry Council, launched in 2024. It also partners with the Bangko Sentral ng Pilipinas (BSP) and the industry to advance credit education and financial literacy.

TransUnion’s Credit Perception Index (CPI) is an annual study conducted exclusively in the Philippines that tracks how Filipinos perceive and engage with credit, the drivers and barriers influencing their behavior, and the implications for the broader financial ecosystem. The 2026 study surveyed 1,000 consumers from May 6-26, 2026, to assess Filipinos’ current attitudes and future openness to credit, examining their knowledge, trust and favorability toward credit and other financial products.

For more information and insights, please view the full report of the TransUnion Credit Perception Index.

*The CPI Score Factors

1. Reservations – Concerns or barriers that may discourage credit use.
2. Stigmas – Negative perceptions associated with credit.
3. Credit messaging – The likelihood to use credit after learning about its potential benefits.
4. Favorability – Overall positive perceptions of credit products.
5. Product trust – The perceived trustworthiness of credit products.
6. Concept knowledge – Self-reported knowledge of a defined concept of credit.
7. Product knowledge – Self-reported knowledge of specific credit products.

Higher scores are more favorable across all factors. Stigmas and Reservations are reverse-scored, meaning higher scores indicate fewer negative perceptions and reservations toward credit.

Manila, Philippines, August 19, 2025 – TransUnion (NYSE: TRU), a global information and insights company and the Philippines’ first comprehensive private credit reference agency, today released its third annual Credit Perception Index (CPI). As an important part of TransUnion’s ongoing commitment to promote credit literacy and financial inclusion in the country, the CPI examines how Filipinos perceive credit, the drivers and barriers influencing their behavior, and the implications for the broader financial ecosystem.

The Philippines’ 2025 CPI score stands at 73 out of 100, only slightly lower from 74 in 2024¹, signifying overall stability in credit sentiment. While most CPI score factors such as favorability, concept knowledge, product knowledge, reservations and stigmas remained relatively steady, trust in credit products increased significantly by six points.

Conversely, credit messaging receptivity—the likelihood to use credit after learning about its potential benefits—dropped by nine points. This decline may be attributed to external factors such as higher interest rates and growing concerns about digital fraud.

TransUnion CPI Score and Score Factors of the General Population

Knowledge and interest remain strong

The overall stability of the CPI score is underpinned by a well-established understanding of credit and a growing appetite to engage with financial products. More than two-thirds (69%) of Filipinos say they are knowledgeable about what credit is, in general. Moreover, interest in learning about specific credit products grew, especially for payday loans (+7 percentage points [pp]), micro loans (+7pp), mobile loans (+6pp), personal loans (+5pp), and buy now, pay later (BNPL) (+5pp).

“We are glad to see the CPI score holding largely steady in 2025, supported by growing trust in credit products. More encouragingly, this year’s CPI results also tell us that Filipinos are eager to learn more about financial options that are relevant, accessible, and suited to their needs,” said Peter Faulhaber, President and CEO of TransUnion Philippines. “This increasing openness is a positive indicator of progress. As financial literacy deepens, we anticipate even greater familiarity, trust and responsible use of credit – key pillars in building a more inclusive and robust financial ecosystem in the Philippines.”

Barriers to credit use linger

Despite positive gains in trust and openness, external factors continue to hold back Filipinos from actively using credit. Across all three population groups surveyed—the general population, the unbanked and the financial technology (FinTech) users—high interest rates emerged as the top deterrent to credit usage, cited by 59%, 52% and 61%, respectively. Concerns about scams and fraud followed closely, affecting 52% of the general population, 47% of the unbanked and 52% of FinTech users. These figures highlight widespread apprehension about security threats across different population groups, regardless of their CPI score.  

Indeed, security and trust emerged as key consumer considerations when choosing to engage with financial institutions, cited by more than half (58%) of the respondents, just slightly behind convenience at 60%.

These findings underscore a critical challenge: while trust is improving, consumers still require stronger assurances through safer and more supportive credit environments. Addressing these concerns will be key to unlocking broader participation in the credit ecosystem and advancing financial inclusion across all segments of the population.

Narrowing gap between general population and the unbanked

A closer look at population segments reveals that the TransUnion CPI score for the unbanked Filipinos rose by two points—from 65 in 2024 to 67 in 2025—reducing the gap with the general population from nine to six points. Notably, this two-point increase among the unbanked also outpaced that of the general population (+2 points vs. -1 point). This improvement was primarily driven by significant gains in credit product trust (+9 points) and knowledge (+8 points).

TransUnion CPI Scores of the Three Population Groups

The unbanked also demonstrated enhanced understanding across nearly all credit products surveyed, with marked progress in knowledge of mobile loans (+16pp), payday loans (+15pp), automotive loans (+13pp), micro loans (+12pp), personal loans (+10pp) and BNPL (+10pp). These trends suggest growing familiarity with formal credit options, although overall knowledge (56%) still trails behind the general population (69%).

FinTech emerges as the first financial product among younger generations

Recognizing the increasing influence and widespread adoption of FinTech in the country, TransUnion introduced FinTech users as a new population group in this year’s CPI. Among the respondents, FinTech usage is nearly universal, with 91% reporting they use at least one digital financial product.

Most commonly used FinTech products include eWallets (77%), online banks (51%), and digital payment apps (47%). Notably, over one-third (35%) of the general population reported an eWallet as their first financial product, surpassing bank accounts (30%). This trend is especially evident among younger generations, with Gen Z (47%) and Millennials (37%) more likely to start their financial journey with an eWallet, while Gen X and Baby Boomers favored bank accounts at 40% and 34%, respectively.

In terms of credit perceptions, among the three population groups surveyed (general, FinTech, unbanked), FinTech users posted the highest CPI score in 2025 at 74, along with the highest level of general credit knowledge (71%), outperforming both the general population and the unbanked.

“The strong performance of FinTech users and the narrowing gap between the unbanked and general population reflect encouraging momentum toward greater financial inclusion,” said Faulhaber. “However, to fully unlock the benefits of credit and drive broader adoption, we must continue addressing persistent barriers – especially concerns around fraud and security that still deter many Filipinos from engaging with credit. By fostering trust and enhancing financial education, we can empower more Filipinos to participate confidently in the credit economy, helping build a financially resilient population that supports the nation’s journey toward upper-middle income status.”

For more information and insights, please view the full report of the TransUnion Credit Perception Index study.

¹ The 2025 CPI score computation was refined to provide a more holistic and robust view of Filipino consumers and capture shifting perceptions and behaviors. The same formula was applied retroactively to enable year-over-year comparisons.

Based on proprietary insights from TransUnion’s global device risk consortium, the analysis found that when the consumer was in the Philippines during the transaction within the Black Friday shopping period, 12.8% of e-commerce transactions were suspected to be fraudulent. While this number was 4.4% higher than the same period in 2022, it was alarmingly 19.0% above the rest of 2023 prior to Nov. 23.

Despite the percentage of suspected e-commerce fraud in 2023 before the holiday shopping season being the lowest in past three years at 10.7%, the rapid uptick during the Black Friday shopping period shows that retailers should remain cautious in detecting and combating fraud to protect themselves and consumers during the busiest business season of the year.    

The Percentage of Suspected E-Commerce Fraud During the Black Friday Shopping Period vs. Overall

“Just as the holiday season drives consumers online to begin shopping for gifts for their loved ones, so does it become a destination for fraudsters seeking to take advantage of this time for their financial gain,” said Yogesh Daware, chief commercial officer at TransUnion Philippines. “Online retailers must ensure that consumers shopping their sites for the best deals are at the same time protected from fraud in the most seamless and friction-right way possible.”

The study also revealed the suspected digital fraud rate for each day during the holiday shopping period in the Philippines. Similar to last year, the suspected digital fraud rate was the highest on Black Friday, November 24.

The Suspected Digital Fraud Rate Varies for Each Day of the

2023 Holiday Shopping Weekend

As part of this analysis, TransUnion also determined the top indicators of fraudulent e-commerce transactions during the holiday shopping season globally, including the Philippines. This year, transactions per IP (triggered by an unusual volume of activity from a single Internet Protocol [IP] address to a customer’s site in a short period) and transactions per device (triggered by an unusual volume of activity from a single device to a customer’s site in a short period) were the leading indicators for potential fraud attempts.

“The days leading up to the Christmas holidays mark the biggest shopping season of the year for retailers in the Philippines, but equipping themselves with the proper tools to detect fraud at the first warning sign is a year-round priority. A critical way to minimize fraudulent transactions while at the same time protecting legitimate ones involves implementing holistic fraud solutions that can verify customer identity and authenticity at the very beginning of a transaction, including both account creation and login,” added Daware.

Consumers Express Concern This Holiday Season

The increase of suspected digital fraud during the traditional busiest days of the holiday shopping season occurred as consumers continue to express concern about being victimized during this popular shopping period. TransUnion’s Q4 Consumer Pulse Study found that 93% of Filipinos consumers are extremely, very, or moderately concerned with being victimized by online fraud this holiday season – a slight increase from 92% in 2022.

TransUnion came to its conclusions primarily based on intelligence from its identity and fraud product suite, TransUnion TruValidate™, which helps secure trust across channels and delivers efficient consumer experiences. The rate or percentage of suspected digital fraud attempts reflect interactions which TransUnion customers either denied in real time due to fraudulent indicators or determined to be fraudulent after a manual review process—compared to all transactions it assessed for fraud.

To find out how this data varies by select countries and more, TransUnion’s holiday fraud insights can be found here.

Manila, Philippines, November 23, 2023 – Filipinos are focusing on building financial resilience through the current high-pressure economic environment: even though a majority (80%) expect their income to increase in the next 12 months, more than half (51%) are saving more into their emergency funds, and more than a third (34%) are accelerating their debt repayments.

This cautious attitude extends to how Filipinos are planning to calibrate their household budgets over the next three months. While some foresee increased spending on bills and loans (43%) and retail purchases (35%), others intend to cut spending on non-essential items (48%), large purchases like cars and appliances (44%), and even digital services (21%). This nuanced approach to managing finances reflects a population that is navigating economic uncertainties with caution.

These are among the findings of the Q4 Consumer Pulse Study into consumer behaviors and attitudes about current and future household budgets, spending and debt, published by TransUnion (NYSE: TRU), a global information and insights company.

Fewer Filipinos see credit as an important factor in achieving financial goals

Fifty-eight percent of Filipinos consider it extremely or very important to use credit to achieve their financial goals, a decrease of six percentage points year-over-year (YoY), down from 64%. However, 63% of Gen Z (born 1995 - 2004) consumers believe that access to credit is important.

Survey findings also showed a noticeable drop in Filipinos’ perception of having sufficient access to financial products. Only 40% believed they have adequate access during Q4 2023, down from 45% during Q4 2022. Only 37% of Gen Z consumers are confident in their potential to access credit.

Despite the unmet demand, more than half (59%) of those that considered applying for new credit or refinancing existing credit, ultimately decided against it. When asked about the reasons that led to their decision, the high cost of borrowing was the primary deterrent (39%), followed by  turning to an alternative funding source (32%) and income or employment status (29%). These challenges reveal opportunities for lenders to further enhance financial inclusion.

With fewer Filipinos recognizing the value of credit, survey findings also revealed a dip in the importance of credit monitoring. Respondents who deemed the practice to be extremely important fell to 35% in Q4 2023, down from 44% in Q4 2022. Daily checks fell to 13% from 18% in the previous year, while 20% of respondents still do not monitor their credit reports at all – a slight increase from 18% in Q4 2022.

“Understanding one’s credit health is an important step in financial management to safeguard a healthy financial future. It helps consumers stay on top of their creditworthiness and be ready for any immediate financing needs in an uncertain economic environment,” said Pia Arellano, president and CEO of TransUnion Philippines. “As a provider of global information solutions, we know that these findings indicate a need to intensify consumer education efforts across the financial system about how access to credit information can affect or benefit an individual’s financial health and enable them to make more informed financial decisions.”

Filipinos are concerned about sharing personal information online

Data from Q4 2023 shows that Filipino experiences with digital fraud remain a leading concern. A significant majority (64%) of survey respondents reported being targeted by fraudsters but did not fall victim to them, while 8% admitted to being defrauded.

In terms of fraudulent schemes, 50% of survey respondents were targeted by phishing attacks (when fraudulent emails, websites or social media platforms are used deceptively), followed by smishing (fraudulent text messages intended to trick recipients into divulging data) at 43%. Voice-call scams (vishing) and third-party seller scams on legitimate online retail platforms were also prevalent, indicating scammers’ diverse array of tactics.

The prevalence of digital fraud is a possible reason that 90% of survey respondents express concern over sharing their personal information. This heightened vigilance reflects an increasing societal awareness of the risks associated with the digital world.

This overarching caution implies the need for better safeguards against digital fraud, especially with reports showing that local online scam victims lost over PHP 155M to various fraudulent schemes from January to August 2023^[1].

“Data privacy safeguards personal identity and promotes trust in digital interactions in an increasingly data-driven world. With the need for increased cybersecurity and other safeguards against digital fraud, TransUnion Philippines continues to educate individuals and businesses alike about emerging fraud trends, providing a suite of identity proofing and fraud prevention solutions to help more people take better control of their online lives,” said Arellano.

TransUnion’s Consumer Pulse Study surveyed 907 adult Filipino consumers from September 27 to October 10, 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] https://pia.gov.ph/news/2023/11/08/dilg-sec-ink-moa-to-strengthen-campaign-against-financial-scams

Manila, Philippines, October 11, 2023 – More Filipinos’ household finances have improved over the last three months, according to the Q3 Consumer Pulse Study by TransUnion (NYSE: TRU), a global information and insights company.

The study, which surveyed 1,000 adult Filipino consumers from July 6 to 24, 2023, also showed that more Filipinos are comfortable owning credit products and completing digital transactions. The observed shift in sentiment towards credit products and digital payments corresponds with digital banks and financial technology (FinTech) companies such as e-wallets continuing to establish a foothold in the country. At the same time more Filipinos are also concerned about their safety from cybersecurity threats.

More Filipinos optimistic about income and household finances

Alongside the 4.6% expansion of the Philippine Gross Domestic Product (GDP) observed in Q2 2023^[1], 52% of Filipino survey respondents reported better than planned household finances during Q3 2023 – an increase of three percentage points from 49% in Q2 2023.

Additionally, 44% of respondents in Q3 2023 reported an increase in income over the past three months, a slight increase of three percentage points from 41% observed in the previous quarter. 

Filipinos are growing comfortable with credit

Almost all (96%) respondents to the Q3 2023 survey see access to credit and lending products as an important way to achieve financial goals.

A deeper dive into the findings shows that the number of Filipinos comfortable owning credit accounts such as loans and credit cards increased by six percentage points to 41% in Q3 2023, up from 35% in Q2 2023. This growing comfort with having credit products is also seen in the future plans of more Filipinos. More than half the respondents (51%) indicated they were planning to apply for a new personal loan within the next year, an increase of five percentage points from 46% in Q2 2023.

“Credit can be a powerful tool that helps people improve their lives. It is a very encouraging sign to see more Filipinos growing comfortable with credit and using it to unlock better economic opportunities,” said Pia Arellano, president and CEO of TransUnion Philippines. “The proliferation of digital banks and financial technology players is also a positive sign. These entities are helping to expand access to credit so more Filipinos can enjoy the benefits of financial inclusion.”

Digital banks and FinTechs seen as sources for credit products

The study’s findings also show that Filipinos are accessing credit products from new sources: 32% of respondents said they have existing credit cards or loans from a digital bank – banks with no physical branches who offer financial products and services processed through digital platforms^[2] - while 26% said they have a loan from a FinTech firm.

However, 42% of Filipinos in Q3 2023 said they would still choose the institution that offers them the lowest interest rate when applying for a new digital loan – whether the lender is a traditional bank, digital bank or FinTech institution. While digital banks and FinTech companies have emerged as viable options, these findings are indicative of a discerning consumer base that actively seeks credit products that offer the best terms and conditions.

Aside from seeking affordable credit products, speed of approval also emerged as an influencing factor in choosing credit products: 91% of Q3 2023 respondents cited real time approval when applying for a digital loan being important to them – an increase of three percentage points from Q2 2023.

Cybersecurity seen as a concern with more transactions happening online

More Filipinos now report transacting online. When asked about how many of their transactions are done over the internet, 58% reported completing more than a quarter of their transactions online, an increase of two percentage points from the previous quarter.

Coupled with this rise, cybersecurity also emerged as a concern for more Filipinos. Asked what obstacles they encounter while using digital technology in new ways, 49% expressed concerns about cybersecurity threats – the biggest concern and a three-percentage point increase from the previous quarter.

When it came to the cyber threats Filipinos reported being most concerned about, nearly two thirds (65%) cited stolen identities, over half (51%) data breaches and 45% credit card fraud. Despite growing concerns regarding cybersecurity threats, among those who said they didn’t take action within the last 60 days in response to cybersecurity concerns, 66% said they took no action because they were unsure of what to do – an increase of 11 percentage points from the previous quarter.

“As more aspects of our lives move online, the role of cybersecurity in this progressively internet-centered world is vital. At TransUnion Philippines, we provide a host of identity proofing and fraud prevention solutions to keep fraudsters and other malicious entities from perpetrating crimes against consumers and businesses. TransUnion Philippines is ready to work with financial institutions, businesses, and consumers to provide the education and solutions needed to help keep online spaces safe,” said Arellano.

For more information, please view the infographics of the Consumer Pulse Study. 

^[1] https://www.psa.gov.ph/content/gdp-expands-43-percent-second-quarter-2023

^[2] https://www.bsp.gov.ph/Regulations/Issuances/2022/1154.pdf

Manila, Philippines, September 26, 2023 – Lenders that understand evolving consumer credit needs can confidently grow according to TransUnion Philippines research presented during its recent Big Data Summit. Findings presented show that consumer demand for credit is increasing, with an additional 89% from the total number of inquiries received in Q2 2022. Of those inquiries, 66% were for credit cards, 23% were for personal loans, while the remaining 11% were for housing and auto loans. While credit cards still comprise a majority share of demand, inquiries for personal loans are gaining ground on credit cards. This is driven by digital banks and FinTechs who have entered the market.

Demand for credit is growing outside the NCR

A geographical breakdown of the figures shows that 55% of the total new credit application inquiries received in Q2 2023 came from regions outside of the National Capital Region (NCR). This indicates a reversing trend over the last two years as inquiries emanating from the NCR held the majority share of inquiries received at the onset of the pandemic. This trend can be attributed to expansion policies, with banks, digital banks, and FinTechs establishing footholds in non-NCR regions.

Casting a wider net for New-to-Credit (NTC) consumers

New-to-Credit (NTC) consumers are those with no prior credit history who opened their first ever traditional credit product such as a credit card or auto loan. Analysis showed that of all the new credit application inquiries received in Q2 2023, 26% were from the NTC segment. Primarily driven by unsecured lending, these findings show an increase of five percentage points of the total number of NTC applications tallied in Q2 2022.

With the observed increase in demand over time, lenders are seeing the potential of the NTC consumer segment as an avenue for growth where they can increase their approval rates. However, to maximize growth, lenders need information to make sound decisions in a rapidly evolving acquisition environment.

While credit scoring can identify good borrowers, establishing trust based on a prospective borrower’s identity attributes and address verification can help identify trustworthy borrowers among NTC consumers. By meeting those types of set parameters, such borrowers could enjoy benefits such as Straight-Through Processing (STP), avoiding the need for extensive field investigations.

Harnessing data to better understand consumer behavior

“Understanding consumers more deeply is imperative, now more than ever,” said Pia Arellano, president and CEO, TransUnion Philippines. “Knowledge and data should be the drivers that will empower us to adapt and act accordingly.”

The emergence of alternative data-based credit scoring is another reason lenders have increased confidence in the NTC consumer segment. The World Bank defines alternative data as information gathered from non-traditional data sources^[1]. The availability of alternative data such as telco data provides a valuable tool for assessing the creditworthiness of NTC consumers and enables lenders to find and approve more good customers.

Lenders can also use this data to prudently provide larger credit limits or loans with better terms to NTC consumers. By better understanding the needs of this segment, NTC consumers enjoy better experiences which can go a long way in generating long term loyalty. Already, Filipino consumers’ telco data, including reloads, repayments, mobile data usage and device data, can be included in the calculation of their credit score.
 

What we can do to maximize growth and further increase financial inclusion

While utilizing the power of data can unlock greater economic opportunities for more people, local challenges to financial inclusion persist. One of the biggest insights from TransUnion Philippines’ recently published Credit Perception Index Study was that many Filipinos have a negative perception of credit. To them, credit is associated with bad debt, overspending, and financial irresponsibility. Alongside a preference for traditional financial products, these reasons could be influencing factors for why the penetration rate for credit cards in the country stands at only 25%, compared to countries like the United States and Hong Kong where the percentages of adults who own credit cards stand at 70% and 69%, respectively.

While demand for credit cards may be growing, there remains a need for the formal financial sector to work together to educate Filipinos on the benefits of credit products, and address misconceptions surrounding credit to improve financial inclusion in the country.

“Clearly, there’s significant work to be done to change perceptions. Just as it takes a village to raise a child, it will take sustained collaboration to build the road to financial literacy and inclusion in the Philippines,” said Arellano.

^[1] https://blogs.worldbank.org/psd/how-can-alternative-data-help-micro-small-and-medium-enterprises-msmes-access-credit-0

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)

Manila, Philippines, June 15, 2023 — New-to-credit consumers – those early in their credit journeys – in the Philippines and across the globe generally gain access to credit from their first application, and are satisfied with the amount of credit they receive. The study found that on average, over 60% of NTC consumers globally said their need for credit will increase in the next three to five years, with the highest levels in developing markets (led by India at 79%). Approximately 61% of NTC consumers in the Philippines stated their need for credit will rise in this same timeframe.

These and other findings from a newly released TransUnion (NYSE: TRU) global study, “Empowering Credit Inclusion: A Deeper Perspective on New-to-Credit Consumers”, give insights to lenders in both developed and developing credit markets on how to approach additional credit needs from new-to-credit consumers, as well as what these consumers value most in their loan providers.

The study included an online global survey of consumers in the Philippines Dominican Republic, Brazil, Canada, Colombia, India, the United States, and South Africa, as well as credit bureau data and insights about millions of new-to-credit consumers in varied global markets, including Canada, Colombia, Hong Kong, India, South Africa, and the United States. TransUnion defined a new-to-credit (NTC) consumer as one with no prior credit history on their credit bureau file who opened their first-ever, traditional credit product such as a credit card, personal loan or another loan type unique to individual regions. The study then examined the behaviors and performance of those new-to-credit consumers over the subsequent two years after opening their first credit product. 

“A particular focus around the topic of financial inclusion is credit inclusion – the ability of consumers to access traditional lending products, such as credit cards, personal loans and mortgages. These products serve as a means to financial mobility for consumers and can be a gateway to a better quality of life, enabling homeownership, business formation and wealth creation,” said Pia Arellano, president and CEO of TransUnion Philippines. “The more consumers who can participate in credit markets in a region, the greater the opportunities for broad economic inclusion. The data from our global study demonstrate that new-to-credit consumers are often good risks who are hungry for credit and will show loyalty to those financial institutions that offer them their first credit accounts.”

Over half of NTC borrowers get approved on the first application

The online global survey set out to understand the voice of NTC consumers, and included responses from 8,465 NTC consumers from a range of markets.

According to the study, among Filipino consumers surveyed, more than half (52%) said their first credit products were approved on their first applications, with 90% being satisfied with the amount of credit they received. A personal loan was cited as a first credit product opened by 50% of NTC Filipinos, followed by credit card as the next most common product opened. These products both offer liquidity to consumers, giving them flexible access to credit, which is likely a driving need for consumers entering the credit.

Other Filipino NTC consumers chose student loans, payroll loans and auto loans as their first products in building a credit profile.

The study found that new expenses were the primary driver for opening a first lending product in nearly all markets, excluding the United States and Canada, where having access to a convenient means of spending was the top motivator. In the Philippines, 57% of NTC consumers opened their first credit product in response to a new expense, and 48% did so to access a more convenient means of transacting.

The study also found that convenience is the top criterion in choosing a lender among NTC borrowers in all regions except Brazil, suggesting opportunities for lenders to tailor their products to capture the NTC segment. In the Philippines, 47% of consumers cited convenience as their top factor, with 23% saying that they chose an institution based on recommendations by friends or family.

Financial literacy key to unlock opportunities

The survey findings also indicated that 44% of NTC consumers in the Philippines would expand their use of credit if their payments were lower, with 40% saying that they would do so if better credit offers were available. A future life event – like getting married or having a child – would see 37% of Filipinos expanding their credit portfolio. In addition, 36% of Filipino NTC consumers would expand their use of credit if they received education about the availability and benefits of credit, and 34% would do so if they had more clarity on the total cost of credit, including fees and interest.

However, 46% of Filipino NTC consumers stated that they don’t want to expand their use of credit because they don’t want to lose control of their finances, while 44% said it was because they don’t want to get into more debt.

“These concerns may be due in part to their relative inexperience with credit, and limited understanding of their credit capacities and successful credit management behaviors. Empowering new-to-credit consumers with education tools around budgeting, credit monitoring and other facets of credit management can help build confidence and increase their understanding of credit as a useful tool for achieving financial goals and creating a better life,” said Arellano.

NTC Filipinos are embracing online financial services, with 67% completing up to half their transactions online, with a further 24% saying the same for between half and three quarters of their transactions. Of those that apply for a loan via a website or mobile app, 74% say that real-time approval is very important, demonstrating consumers’ expectations that lenders will have immediate access to their credit history, so that they can respond to applications expeditiously.

“New-to-credit consumers in the Philippines and around the world appear to have a need for credit to improve their lives, and understand the risks of taking on too much debt,” Arellano said. “At the same time, many Filipinos are held back from accessing credit because of their lack of financial visibility. Where traditional data is not available to give financially ‘invisible’ Filipinos a credit score, lenders can and should leverage alternative data such as telco data to help score consumers with little to no credit history. This will enable more people to be visible in the formal financial system and, on a greater scale, empower building a nation of well-informed consumers confidently making sound financial decisions to improve their lives.”

For detailed information about all global markets represented in the study, please click here.

Government institutions, businesses and financial institutions all have a role to play in making digitalization and financial inclusion possible, as they work together to provide solutions and services that fulfill their roles as economic enablers, empowering more people to participate in the formal financial system.

For example, The Bangko Sentral ng Pilipinas (BSP) designed a three-year digital transformation roadmap hinged on strengthening customer preference for digital channels, and the creation of more digital financial services that make the innovative use of consumer data possible.

This roadmap is already yielding results. In 2021, the share of digital payments based on volume was at 30% - strong progress in the BSP’s goal of converting 50% of the total volume of payments into digital form. This figure is significant considering that payment services are the gateway of most Filipinos to the formal financial system. 

With the BSP focusing on four enablers that will lead the digital transformation of the local financial sector – Payments Digitalization, Digital Banking Framework, Open Finance Framework, and a Regulatory Sandbox – it is responding to public demand for faster, more convenient, and secure financial products and services by creating an environment that encourages innovation to flourish.

The Philippines’ Department of Information and Communications Technology (DICT) supports this. With its  mandate to spearhead the national ICT development agenda, this includes improving internet connectivity across the nation and the development of the National ICT Portal for effective data consolidation and dissemination. These efforts help promote digital transformation in the government to facilitate better public service delivery.

Key initiatives include the adoption of a Cloud First policy for government administration and the delivery of services, the creation of a National Government Portal (NGP) to serve as a one-stop shop for government data, information, and services, a Central Business Portal for all business registration needs, and the Electronic Know Your Consumer (eKYC) for financial institutions, businesses, and local government units to verify identities through a higher degree of automation.

Broadening the scope of digital financial inclusion in the country can be transformational for Filipinos who lack effective access to formal financial services. The most recent TransUnion Consumer Pulse Study highlights that a growing percentage of Filipinos are more comfortable with transacting online, with 77% of respondents using digital financial services – up from 73% in the previous quarter.

When asked about the percentage of transactions they complete online, only 5% of respondents reported not carrying out any online transactions. For those who do, 5% conducted 76-100% of their transactions online, 22% reported doing 51-75% of their transactions online, 35% did 26-50% of their transactions digitally, while 34% accomplished anywhere from 1-25% of their transactions online.

As the country continues to shift towards a digital financial system, we recognize that both technological advancements and the vast amount of data produced by businesses are important contributors in developing the local economy. Data allows businesses to make more informed decisions and helps form a reliable basis for trust. The volume of data constantly generated and processed provides more timely and robust insights into how consumer behaviors can change. This highlights the need for businesses to respond swiftly to those changes.

Inclusive digital financial efforts can also bring in a new generation of data footprints, allowing financial institutions to reach out to consumers who were previously overlooked. The further analysis of data leads to knowledge and solutions. These solutions in turn present opportunities to create new financial products and services for both consumers and businesses. By creating greater access to credit products and services, lenders can attract and build loyalty among segments of the population who are credit invisible.

Through analytics, integrated solutions, and insights, TransUnion is dedicated to finding innovative uses for information and the insights derived from it, to make better and smarter decisions. To bridge the gap between consumers and businesses, TransUnion harnesses the power of alternative data such as mobile data, including reloads, payments, mobile data usage, and device data in CreditVision^TM Link, launched in country last year. This enables lenders to expand their reach by accurately scoring those with little to no formal credit data to assess their creditworthiness and create behavioral insights that can open opportunities for consumers and lenders to engage.

As the Philippines undergoes digital transformation and with more Filipinos growing increasingly comfortable with transacting digitally, the challenge of ensuring information security remains. To help both businesses and consumers transact with confidence, TransUnion uses data, software, and technology to provide comprehensive profiles of consumers so they can be safely and reliably represented. This is what it means to use “Information for Good”.

Digital transformation and collaboration are pillars to driving more inclusive growth for our country. Data solutions offer new perspectives that promise more accurate, efficient, and inclusive results. As a provider of information solutions, TransUnion utilizes data to lay the foundations of mutual trust between businesses and consumers. Through the power of information, they make better financial decisions that can aid in our economic recovery.

In fact, most Filipinos (76%) agreed the economy is either already in a recession or will enter one by the end of 2023, while almost half (44%) cited inflation for everyday goods as their biggest concern affecting their household finances for the next six months.

According to the Philippine Statistics Authority (PSA), inflation increased to 6.9% in September, up from 6.3% in August, as food and energy costs continue to increase.¹ The hike may push the central bank to further increase rates and borrowing costs for businesses and consumers.

Filipinos reduce spending, build savings

Recent findings from the Q3 TransUnion Consumer Pulse study, an August 19-September 1 survey of 1,013 Filipino adults, found that inflation was the leading household financial concern over the next six months followed by a possible global recession. Additionally, in anticipation of a possible recession, 66% said they are building up savings.

These financial concerns could be exacerbated by fewer Filipinos (78% compared to 81% in Q2 2022) expecting their incomes to go up in the next 12 months. Baby Boomers (72%) and Gen X (58%) reduced their discretionary spending the most among age groups in the past three months, and Gen Z (69%) and Millennials (62%) said they saved more in emergency funds in the last three months compared to other generations.

When it comes to future spending, Filipinos said that their greatest spending increases in the next three months are likely to be on bills and loans, medical care/services, and retirement funds and investing. They said they are least likely to spend more on large purchases like cars or appliances.

Additionally, 47% of respondents who said they won’t be able to pay at least one of their current bills and loans in full said that they will pay a partial amount for these. Gen Z (58%) and Millennials (55%) who said they expect to be unable to pay at least one of their current bills and loans in full also said that their leading choice of funding to pay these is by using their savings. 

Credit is an option to cope with inflationary pressure

Nearly every respondent said they believe having access to credit and lending products is important in achieving financial goals, and 56% said that they were planning to apply for new credit or refinance existing credit within the next year. More than half (54%) of Filipinos who said they plan to apply for new credit within the next year said that they would apply for a new personal loan, while 41% said that they’ll apply for a new credit card.

Across generations, 63% of Millennials said they plan to apply for new credit or refinance existing credit within the next year, with 60% of Gen Z saying the same. Additionally, as Filipinos cite stagnant income growth, more consumers said they used a payday loan in the past 12 months (18% in Q3 compared to 14% in Q2 2022).

More respondents (83%) believed that monitoring their credit is extremely or very important, up from 80% in the previous quarter.

A significant percentage, particularly among Millennials (33%), said they conduct more than half of their transactions online.

Separately, a vast majority (89%) remained concerned about sharing their personal information. This may be connected to more consumers saying they were targeted by digital fraud in the last three months but did not become a victim of it.

“As more Filipinos’ financial literacy improves, TransUnion is optimistic that more people will have the knowledge and tools they need to make responsible financial decisions, particularly at a time when economic indicators reveal a stressed environment,” said Pia Arellano, President and CEO of TransUnion Philippines. “Filipinos are highly adaptable, but it takes a community, including the corporate and banking sectors, to come together to achieve greater financial inclusion and economic recovery and growth.”

The complete TransUnion Consumer Pulse Study can be viewed here.

¹Inflation rises to 4-year high at 6.9% in September as food, energy costs surge (cnnphilippines.com)

These findings are set against the recent backdrop of the Philippine Statistics Authority (PSA) reporting that inflation reached 6.1% for the month of June – the highest in almost four years³. The uptrend in inflation was due to higher prices for different items and services⁴. Additional findings from the PSA also showed a decline in the purchasing power of the local Peso, highlighting how the value of PHP1 in 2018 is equivalent to only PHP0.87 in June 2022⁵.

Filipinos tighten financial belts

The results from the latest TransUnion Consumer Pulse (May 26-June 7 of 1,005 Filipino adults) showed a palpable shift in how consumers allocate and manage their finances. While 43% of respondents reported an increase in household income in the prior three months, the same percentage of respondents said they decreased discretionary spending such as dining out and traveling in the same time period. Among generations, Gen X (born 1965-1979) and Baby Boomers (born 1944-1964) reported cutting back the most at 49% and 47%, respectively.

A large number of Filipino consumers (42%) are planning to maintain this trend over the coming three months. In terms of large purchases such as appliances or cars, 61% of respondents expected their spending to decrease or stay the same. On the other hand, most respondents (48%) expected to spend more on bills and loans over the same timeframe, the category with the highest reported spending increase.

In terms of the ability to meet financial obligations, 46% of respondents reported being unable to pay at least one of their current bills and loans in full. To maintain the payment of bills and loans among those who said they’ll be unable to pay at least one bill or loan, 46% of respondents intend to use money from savings. At almost half (49%), Gen Z respondents (born 1995-2004) reported preferring this method the most among all generations.

Credit seen as financial enabler

Most Filipinos (96%) believe in the importance of having access to credit and lending products to achieve financial goals. Almost half of all respondents (43%) surveyed believe they have sufficient access to credit and lending products. Baby Boomers led the pack at 55% while Millennials (born 1980-1994) and Gen Z followed at 44% and 41%, respectively.

Over half (55%) of all respondents reported planning to apply for new credit or refinance existing credit within the next year. Baby Boomers led generations with 62% of respondents reporting credit application plans, with Millennials second most likely at 57%.  

Among respondents with plans to apply for new or refinance existing credit in the next 12 months, most expect to apply for new personal loans (53%), and new credit cards (41%). In comparison, over a third (35%) plan to apply for a new mortgage or home loan and almost a quarter (24%) for new car loans. Conversely, over half (59%) of respondents considering applying for new credit or refinance existing credit ultimately decide against it. Some cite the high cost of new credit or refinancing (32%), while others believe that income or employment status would serve as a reason for their rejection (30%).

Additional findings on the reasons for abandoning applications for new credit show that the lengthy amount of time spent awaiting a decision was the third highest factor for more Filipinos (29%), and finding an alternative funding source was the fourth highest (27%).

“Credit can act as a catalyst for economic growth, but many consumers feel excluded or are rejected for credit because lenders can’t accurately assess their credit risk. By using enhanced digital journeys and improved insights, lenders can more accurately price loans and manage risk. Our latest Consumer Pulse Study found that 54% of consumers believed their credit scores would increase if businesses used information not on a standard credit report. This use of alternative data in credit scoring and decisions can significantly increase levels of financial inclusion across the country – enabling greater access to credit for more Filipinos during these challenging times.” said Pia Arellano, President and CEO of TransUnion Philippines.

The complete TransUnion Consumer Pulse Study can be viewed here.

[1] Quarter-on-quarter PH GDP growth could end in Q2 | Inquirer Business

[2] UK think tank: ‘Revenge spending’ in PH likely over as savings dry up | Inquirer Business

[3] https://psa.gov.ph/statistics/survey/price/summary-inflation-report-consumer-price-index-2018100-june-2022

[4] https://ph.news.yahoo.com/philippines-inflation-hits-61-in-june-091550283.html

[5] https://www.gmanetwork.com/news/money/economy/837074/p1-in-2018-was-worth-87-centavos-in-june-psa/story/

“Our global study clearly points to hundreds of millions of consumers around the world being credit unserved or underserved,” said Pia Arellano, regional president and CEO of TransUnion Philippines. “These credit disadvantaged consumers are often unable to access financial products and services because they have no, or little, credit history. This study served to better understand how many people are truly under- or unserved from a credit perspective, while also determining paths for them to gain more credit opportunities.”

The credit data portion of the study explored the characteristics and behaviors of credit unserved and underserved consumers, while offering key insights into their credit journeys. The online global survey gathered sentiment from unserved and underserved consumers on the topic of credit. Unserved consumers are defined as any adult person who has never had an open traditional credit product. The underserved population have minimal credit participation, limited to a single type of credit product and no more than two open accounts of that type, and have been active in the credit market for at least two years.

This study specifically excluded new-to-credit consumers—those who have opened their first product within the past two years—from the underserved population, as many of those new-to-credit consumers become more fully credit active soon after opening their first product. The study sought to understand those consumers who remain unserved or underserved over a longer time period.

Majority of Consumers Looking for New Credit Products

TransUnion commissioned an online global survey of more than 11,100 adults (ages 18 years and older) across multiple markets to gain a better understanding of unserved and underserved consumers’ beliefs, attitudes and experiences with credit that may be influencing their needs and behaviors.

Survey findings indicated that despite unserved and underserved consumers’ lack of credit experience, they understand the benefits and risks of credit and want to maintain control of their finances. In the Philippines, more than half of both unserved (51%) and underserved (52%) consumers expected their need for credit to increase in the next three to five years. Not wanting to incur debt was cited by 53% of unserved and 52% of underserved consumers as the reason they didn’t take on more credit, or any credit in the case of the unserved consumers. Concern about losing control of finances was also a reason given by 40% of underserved consumers for not taking on more credit. This implies that a majority of consumers are looking to gain more access to credit and leverage credit for their financial needs. Globally, the desire to avoid debt was the most commonly cited reason for not wanting more credit, with the exception of Canada.

Most Common Reason Unserved and Underserved Consumers

Responded They Did Not Want Credit / More Credit

Across the globe, survey respondents cited they are planning to apply for credit in 2022 to varying degrees. In the Philippines, 39% of unserved consumers – those without any credit products – plan on applying for credit, compared to 51% of underserved consumers. The material percentage of both consumer groups who intend to seek credit indicates there is a real need for, and interest in, credit. Finding ways to meet the needs of this large population of consumers while prudently managing risk represents a significant growth opportunity for lenders.  

Age Distribution Skews Younger for Unserved Consumers

In the Philippines, the age distribution of unserved compared to underserved consumers varied significantly. Unserved had a much higher percentage of 20-29 year-olds, representing almost half (48%) of consumers in this segment. For underserved this was a much smaller percentage at just over a quarter (28%). Correspondingly, unserved had fewer 40+ year-olds (16%), compared to underserved (33%).

Arellano observed: “As may be expected, we saw a larger percentage of younger consumers in the unserved category, likely because many of them are often at the beginning of their credit journey. At the same time, our research does still point to a large portion of the consumer population that lenders need to work hard to accommodate. The unserved population have never had a traditional credit product and as such can be ‘credit invisible’. However, by using alternative data and advanced techniques, lenders can broaden their reach by accurately scoring consumers with little to no formal credit data. By offering young Filipinos access to finance when they need it most, lenders can build lifetime loyalty and help our economy grow.”

Credit Savvy Consumers Want Better Credit Offers and Better Experiences

The survey findings also indicated that 32% of underserved consumers in the Philippines would expand their use of credit if they had lower weekly or monthly payments. High interest rates were the most common reason both unserved (22%) and underserved (36%) consumers rejected credit offers. This was a common theme observed across the globe, with both unserved and underserved consumers from Brazil, Colombia, and the United States, as well as underserved consumers in Canada, indicating high interest rates as a top reason to decline a credit product offered to them. In the Dominican Republic, both unserved and underserved consumers indicated the top reason for rejecting a credit offer was that the consumer did not need credit anymore, which was also true of unserved consumers in Canada.

Most Common Reason Underserved and Unserved Consumers

Did Not Accept a Credit Product Offered to Them

Consumer experience also played a role in reasons why unserved and underserved consumers would reject a credit offer. A lengthy approval process was cited as a factor in credit offer rejection for 17% of unserved and 8% of underserved consumers in the Philippines. In addition, 16% of unserved and 13% of underserved consumers said they rejected credit offers because they found alternative funding or received a better offer. 

“It’s clear that consumers, even those with little or no credit experience, expect affordable interest rates and monthly payments, along with great consumer experiences. Lengthy approval processes or otherwise negative experiences can lead to a consumer declining an offer of credit. As the cost of credit can often be a deterrent to bringing more consumers into the credit ecosystem, it’s important for financial institutions to develop and offer tailored credit products and services that address these concerns and needs. Furthermore, a seamless consumer experience is a key consideration for lenders when reaching out to unserved and underserved consumers,” said Arellano.

Unserved or Underserved? Survey Confirms Varying Levels of Credit Satisfaction

When comparing the consumer sentiment of unserved consumers with underserved consumers, there tends to be a pronounced difference in the level of satisfaction with their current amount of credit. In the Philippines, 49% of underserved consumers were satisfied or extremely satisfied with their current amount of credit, while only 28% of unserved consumers, those with no traditional credit currently but who may be borrowing from alternative sources, had the same level of satisfaction. Additionally, 21% of unserved consumers were not satisfied at all with their level of credit while only 11% of underserved consumers expressed dissatisfaction. This potentially speaks to differences in awareness of the potential uses and benefits of credit between those with some limited credit activity and those with no credit at all.

“Promoting financial inclusion starts with gathering a better understanding of the different nuances between the unserved, underserved and served populations and what makes them tick. For example, what drives unserved consumers to apply for credit, and why underserved consumers may need a different credit product, may vary greatly. Lenders can use these insights to better meet the unique needs of these consumer segments, and to educate these unserved and underserved segments on ways they can build and improve their credit profiles. In doing so, lenders can play a critical role in helping more consumers become actively engaged in the credit system and promoting greater financial inclusion,” concluded Arellano.

For more information and insights on the global TransUnion study, “Empowering Credit Inclusion: A Deeper Perspective on Credit Underserved and Unserved Consumers,” please download the report.

ⁱ Unserved: Consumers that have never had an open traditional credit product, based on reported accounts on the TransUnion consumer credit database. To size the unserved, we started with the total adult population as reported by the United Nations. We then subtracted the underserved, new to credit and served consumers. The remaining number is the unserved.

ⁱⁱ Underserved: Consumers with some, but limited, credit presence. Specifically, they have:

·       Been active in the credit market for at least the past 2 years

·       0-2 currently open traditional credit accounts

·       Only ever held 1 type of credit product

ⁱⁱⁱ TransUnion’s online global survey included responses from 11,128 adults and was conducted between August 3 2021 – January 5 2022 by TransUnion in partnership with third-party research provider Qualtrics^® Research-Services.

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 surveyed 1,078 adults in the Philippines to measure changing consumer attitudes and behavior based on the dynamics of income, debt and identity theft. The company conducted the study from Feb. 8-23, 2022 with respondents from Gen Z (born 1995-2004), Millennials (born 1980-1994), Gen X (born 1965-1979), and Baby Boomers (born 1944-1964).

With 75% of those surveyed anticipating their household income will increase this year, the survey results reflect the lessons Filipinos learned following the COVID-19 pandemic. In particular, 51% of respondents said in the last three months they saved more in an emergency fund, 45% cut back on expenses for dining out, travel, and entertainment, and 28% added to or expanded digital services like wireless and internet. Over the next three months, consumers expect their spending on the following to increase: medical care/services (44%), retail shopping (37%), and retirement funds and investing (35%).

Credit is an important way to empower consumers and encourage them to participate actively in the economic recovery. In the next 12 months, most Filipinos (51%) expect that they will be able to pay at least one of their current bills and loans in full. However, the other 49% from the past quarter expect that they are unable to pay at least one of their current bills and loans in full, as there’s been no significant change in the ability to meet financial obligations. Lastly, 52% plan to apply for new personal loans. However, half of those surveyed (50%) abandoned plans to apply for new credit or refinance – with the top reasons being the high cost of new credit or refinancing (32%) or they found an alternative funding source (32%). So, though there is appetite for new credit applications, reforms need to be made to make follow-through a reality for more people.

Credit Perception

Among consumers surveyed, it is apparent that all generations believe that it is important to have access to credit and lending products to achieve their financial goals. However, it is the younger Filipinos, Gen Z, who view credit as an essential part of their everyday lives. This is proven by the fact that from nearly half of the respondents who are planning to apply for credit in the next year (46%), half of them are younger generation Filipinos (50%), the Gen Z. Meanwhile, more than half (57%) of those with a credit score between 750 and 789 (considered a ‘very good’ score) said that they plan to apply for new credit.

Online Activities

Reflecting how the pandemic accelerated consumers going online, the survey found 57% of Filipinos said they conduct more than a quarter of their transactions online.

With so many transactions occurring online, fraudsters appear to have taken notice. Forty-five percent of respondents said they had been targeted by a digital fraud scheme in the last three months. Among those targeted, the most common digital fraud schemes that respondents said they encountered were: phishing (42%), money/gift card (38%), third-party seller scams on legitimate online retail websites (30%), fundraising (25%), identity theft (23%) and having their account taken over (22%).

While nearly half of all Filipinos said they believe their credit score would increase if businesses used information not on a standard credit report—e.g., rental payments and buy now, pay later loans—86% expressed considerable concerns about sharing personal information. The top reasons for this involve invasion of privacy (76%) and fear of identity theft (73%).

"From optimism about improved household incomes to anticipated increased spending in key areas, Filipinos are increasingly bullish about our recovery from the global pandemic," TransUnion Philippines president and chief executive officer Pia Arellano said.

"By conducting this study quarterly and making the results public, TransUnion Philippines harnesses information and insights to provide a comprehensive understanding of the changing attitudes and situation in the country. This can help better inform consumers, businesses, policy makers and other stakeholder decisions as the Philippines moves toward economic growth."

To discover more insights surrounding Filipino financial behavior, the latest TransUnion Consumer Pulse Study can be found here.

The TransUnion Philippines Consumer Pulse Study surveyed 1,089 adults in the Philippines to discover findings on the financial impact of COVID-19 on consumers. The study was conducted from Nov. 1-8, 2021, with respondents ranging from different Philippine resident demographics from Gen Z (born 1995-2003), Millennials (born 1980-1994), Gen X (born 1965-1979), and Baby Boomers (born 1944-1964).

“From financial health to the disruptions in daily living, the lives of millions of Filipinos have drastically changed and continue to change due to COVID-19,” said Pia Arellano, President and CEO of TransUnion Philippines. “As an ongoing study, TransUnion Philippines continuously strives to develop a comprehensive understanding of the financial impacts of the pandemic as well as to harness the information to better inform consumers, businesses and other stakeholder decisions as the pandemic continues to impact our daily lives,” Arellano added. 

The impact of COVID-19 on household income and bill payments

Close to half (46%; decreased by 8 percentage points from Q3 2021) of respondents surveyed believe their household income (HHI) will decrease in the future due to COVID-19. There is a belief that vaccinations are a possible contributing factor to a growing optimistic economic outlook. Among the 64% of the population who said they had been fully vaccinated, 13% reported never having their HHI decrease due to COVID-19, and they expect less negative impact in the future (44% compared to 50% of those who do not plan on getting vaccinated).

However, about half (46%) of all households expect to be unable to pay their current bills and loans in full. Among payment methods, the most popular ways used to pay current bills and loans are savings (42%) and partial payments (45%). Personal loans (37%), mortgages and home loans (33%), and credit cards (27%) emerged as the top bills and loans consumers who have these bills and loans say they will not be able to pay.

Adjusting attitudes and plans for economic participation

This cautionary attitude towards spending has carried over into Q4 beyond the 52% of those surveyed saying they had cut back on discretionary spending, with 47% of respondents saying they had saved more in an emergency fund in the last three months. In terms of purchasing behavior, e-commerce looks like it may continue its momentum into the New Year with 47% of respondents saying they’ll increase their number of online transactions in the next three months.

There appears to be a large gap in those wanting to access credit compared to receiving it, with 52% saying they believe it’s important to have access to credit and lending products to achieve financial goals but only 35% said they had sufficient access to credit and lending products. At 51%, millennials were the generation who said they plan to apply for credit the most in the next year. In terms of credit monitoring, 93% of respondents believed in the importance of monitoring credit; with 69% of respondents doing so at least once a month.

A focus on fraud

Digital fraud continues to be a significant worry, especially around the holidays, with 95% of consumers saying they were concerned about being victimized by digital fraud during the 2021 holiday season. Half of the respondents surveyed said they had been targets of digital fraud attempts in the last three months. Across generations, Millennials and Gen X were the most targeted at 54% and 52% respectively.

Overall, phishing (44%) and third-party seller scams on legitimate online retail sites (39%) were the two most common tactics reported for digital fraud schemes among consumers who said they had been targeted. Those findings were consistent across the demographics surveyed.

To discover more insights surrounding the financial impact of COVID-19 on Filipino financial behavior, the latest TransUnion Consumer Pulse Study can be found here.

Credit Scores: The Importance of Representing the Credit Invisible

Traditionally, credit scores are values derived from formal credit data that utilize statistical methods to help predict an individual’s capability to pay back a loan. For Filipinos, a good credit score helps enable access to financial opportunities that can lead to a higher quality of life. For financial institutions, the use and availability of a credit score helps potential lenders determine how much to responsibly lend and how much interest a customer will pay to borrow money or secure a loan.

Despite ongoing increases in financial inclusion, over 50 million Filipinos¹ remain unbanked, with 45% of the unbanked population resorting to borrowing money from non-bank sources – mostly family and friends. With these “credit invisible” consumers left with limited to no access to formal credit, lenders are faced with the dilemma of having insufficient visibility into a potential customer’s risk profile – and are forced to reject the majority of them due to a lack of insight.

CreditVision Link adds another layer of assessment by utilizing alternative data sources like telco (mobile phone) data, including reloads, payments, mobile data usage, and device data. With this technology, lenders can expand their reach by accurately scoring even consumers with little to no formal credit data. This enables faster and easier processing of applications, helping to optimize acquisition strategies by gaining a more holistic view of new-to-credit (NTC) consumers.

“TransUnion’s commitment to financial inclusion in the Philippines is central to everything we do. We are focused on providing financial institutions with solutions that will enable them to support even more Filipino consumers. Through access to rich insights, lenders can increase acquisition volumes and better protect against fraud, all within their own defined risk appetites,” said Pia Arellano, President and CEO of TransUnion Philippines.

“CreditVision Link is the result of our continuously expanding database which includes alternative scoring partners and traditional credit bureau data to accurately represent even unbanked Filipinos, who comprise a majority of the population. This solution benefits consumers and businesses alike and has the potential to build greater economic momentum in our country,” she added.

Information for Greater Financial Inclusion

For consumers, access to financial services is often essential when looking to achieve their goals and access new opportunities – regardless of their current standing. However, for unbanked consumers, more novel and comprehensive approaches to credit scoring and risk assessment are needed to help them access formal, higher quality and more inclusive financial services.

“When lenders are able to offer consumers with a limited or no formal credit history a line of credit, it creates an opportunity to build lifetime loyalty. To do so, access to the best information and insights is critical,” said Ela Reyes, Solutions Group Head for TransUnion Philippines.

“The topic of financial inclusion has never been more important. As the Philippines looks to recover from COVID-19, economic growth will, in part, be fueled by peoples’ access to credit. We’re focused on creating and introducing new more powerful tools for financial inclusion. Access to new and expanded insights is a determining factor in the extent to which different segments of the population can participate in the formal financial system. CreditVision Link, with its depth and breadth of traditional and alternative data, allows businesses to facilitate smoother transactions, and allow more consumers access to the financial services they need,” she added.

 ¹Bangko Sentral ng Pilipinas 2019 Financial Inclusion Survey

Filipinos’ perceived access to credit—or lack thereof—may also have something to do with the high awareness and use of BNPL services. Over half (55%) of respondents in TransUnion’s latest Consumer Pulse study believed access to credit is important to achieve their financial goals, but only just over a third (36% - an increase of three percentage points from Q2 2021) said they have sufficient access to credit and lending products. Despite this, nearly half (46%) of respondents said they plan to apply for new or refinance existing credit in the next year.

Financial institutions extending BNPL as an alternative form of lending should pay particular attention to Millennials and Gen Z (born 1995–2003). The survey revealed that among those who have used BNPL services in the past 12 months, they are the generations most curious with 40% and 38%, respectively, saying they used BNPL because they “just wanted to try it”. Meanwhile, Gen X was the generation most likely to make larger purchases with the service at 34%. Baby Boomers (born 1944–1964) was the generation who most said they used BNPL in order to spread payments over time (60%). More than 30% of each generation surveyed said they used Buy Now Pay Later services because it was easy to apply for it.

“The growing popularity of Buy Now Pay Later coincides with the convenience, availability, and smooth transactions that consumers have come to expect from digital services. Lenders looking to implement campaigns in this evolving and growing area must be able to establish an underwriting system that can identify good customers in order to sustain that reasonable balance between risk and opportunity, and great customer experiences,” said Pia Arellano, TransUnion Philippines president and CEO.

Bills and loans consumers are unable to pay

In the latest round of the TransUnion Consumer Pulse study, the percentage of Filipino consumers reporting their household income was currently decreased reached 64% in Q3 2021. While many hoped a faster COVID-19 vaccine rollout would drive economic recovery, the majority (54%) of consumers believed their household income will be negatively impacted by the pandemic in the future.

About half of all surveyed consumers (48%) were concerned about paying their bills or loans in full. The top bills and loans consumers said they won’t be able to pay among those with these bills/loans were auto lease (36%), personal loan (35%), and auto loan (35%). Meanwhile, 21% of consumers said they received a financial accommodation, such as a deferral, forbearance, payment holiday or eviction prevention in the past year. Mortgage (20%), private student loan (19%), auto loan (16%), and personal loan (16%) were the top bills and loans enrolled in financial accommodation in the past year among consumers with that bill/loan.

In order to pay current bills or loans, 47% said they’ll use money from savings and 40% will borrow money from friends/family, while 41% said they’ll pay a partial amount. Over one in 20 consumers (6%) reported they don’t know how they’re going to pay.

“With BNPL gaining traction, we are seeing a growing opportunity for financial services providers and even marketers to support consumers during this difficult time. In more mature global credit markets, retailers have even been extending BNPL to products or services beyond the usual consumer goods, such as vet care. There is a huge growth potential for BNPL, and TransUnion is focused on helping lenders accommodate evolving consumer needs by helping inform risk decisions so that the economic viability of BNPL lending can be sustained. Lenders that use advanced information and insights and digital onboarding technology can grow market share, while also safeguarding themselves and consumers from fraud. Done right, consumer lending has the ability to stimulate economic activity and benefit the nation as a whole,” said Arellano.

Fighting fraud schemes targeting consumers

TransUnion has constantly warned about the prevalence of fraud in the digital space. Fraudsters didn’t fail to notice the exponential increase in online transactions in the past year and have been trying to capitalize on trends as they emerge.

In the latest Consumer Pulse study, almost half (48%) of Philippine respondents said they have been targeted by a digital fraud attempt in the last three months. Among those targeted, phishing (44%) and third-party seller scams on legitimate online retail websites (43%) were the two most common tactics employed by fraudsters online.

“Technology has afforded us with solutions that cater to the ever-evolving market needs and consumer demands. Many BNPL companies now utilize real-time decisioning, but all financial institutions must keep in mind that their risk management strategies should always include multi-layered defenses against fraud while maintaining friction-right customer experiences. At TransUnion, we’ve found that harnessing device intelligence, in addition to our own bureau data and alternative data from our partners, expose fraud and fraud linkages that can’t be detected by simple face or ID scans alone. We are committed to continuously innovating to provide our members with the tools they need to grow their business and protect them and the consumers they serve from fraud,” said Arellano.

*TransUnion’s global Consumer Pulse study quantifies the ongoing financial impact of COVID-19. This online survey of 1,100 adults in the Philippines was conducted Aug. 11–17, 2021 by TransUnion in

partnership with third-party research provider, Qualtrics® Research-Services. For previous Consumer Pulse Studies, visit our Consumer Pulse study page.

TransUnion’s Consumer Pulse study findings showed the outlook is still uncertain, with 54% of respondents expecting their household income to be impacted in the future – an increase of five percentage points from the previous quarter. The majority of consumers (85%) continued to be concerned about being able to pay their bills and loans, with nearly half (49%) anticipating they’ll be unable to pay at least one of their current bills and loans in full.

Among those who expect they’ll be unable to pay bills/loans, middle generations plan to use money from savings (47% of Millennials and 42% of Gen Xers), refinance/renegotiate payments/rates (10% of Millennials and 12% of Gen Xers), and take out a personal loan (both at 14%) – more than other generations would. Among Gen Z (born 1995–2003), for instance, 40% plan to use money from savings, 8% plan to refinance/renegotiate payments/rates, and 12% said they will take out a personal loan.

Middle generations also reported having saved more in emergency funds (50% of Millennials and 48% of Gen Xers, versus 40% of Gen Z) and paid down debt faster (24% of Millennials and 19% of Gen Xers, versus 15% of Gen Z). However, they still have greater credit needs – 52% of Gen Xers and 50% of Millennials said they plan to apply for new credit or refinance existing credit within the next year, compared to only 44% of Gen Z. Specifically, Philippine consumers plan to apply for new personal loans (23%), credit cards (16%), and mortgages (16%).

“The second quarter started with stricter quarantine restrictions anew as the Philippines faced a surge in COVID-19 infections. The economic consequences of the pandemic remain prevalent across many aspects of our study data, and in some cases, we are seeing worsening results – from consumers’ inability to pay bills and loans to being targeted and falling victim to fraud schemes,” said Pia Arellano, TransUnion Philippines president and CEO. “Despite this, many respondents are still hopeful that their finances will recover which is a good sign of their economic outlook. Our results show the provision and availability of credit is a big feature for Filipino finances and consumers’ ability to balance household finances in the coming months. Lenders need to make informed decisions so they can extend consumers the products best suited to their individual needs and circumstances, and help build a sustainable recovery whilst also managing risk effectively.”

Consumers optimistic about their financial future

Among all the respondents, 74% expressed positive feelings about their financial outlook, with 61% classifying their financial situation as hopeful – where their household income has decreased, but they think their finances will recover. On the other hand, 8% said their financial situation was either stable or thriving – where their household income has not decreased and their finances in 2021 are as planned or better. Meanwhile, 5% said they were resilient as their household income has decreased during the pandemic (currently or in the past) but their finances have fully recovered.

Philippine consumers indicated they plan to increase or at least retain their household spending over the next three months. Seventy-two percent said they will increase or at least retain their spending on digital services and 61% on retail (clothing, electronics, etc.). However, everyday living priorities are still in order as 77% said they will also increase or at least retain spending on medical care/services, 74% on bills and loans, and 62% on retirement funds/investing.

To further understand the financial impact of COVID-19, the Consumer Pulse study also includes a section on financial inclusion. It found that 86% of respondents (a drop of four percentage points from previous quarter) believe access to credit is at least moderately important to achieve their financial goals. However, only 32% (a drop of two percentage points) said they have sufficient access to credit. The older the respondents are, the more they felt they have enough access to credit and lending programs: 42% of Baby Boomers (born 1944–1964) share that belief, whereas only 31% of Gen Z say they do. Despite this, 77% of all respondents believe that monitoring credit is very or extremely important. More than two-thirds (68%) also monitor their credit at least monthly.

Significant increase in digital fraud activity

Of Philippine respondents, 57% expect their number of online transactions to increase over the next three months. However, alongside increased online activity levels, fraudsters keep taking advantage. During the pandemic, there was an increase in fraud activity, with digital fraud attempts from the Philippines increasing 19% when comparing the first four months of 2021 with the last four months of 2020, as reported in TransUnion’s most recent global fraud study.

In the Consumer Pulse study, meanwhile, 42% (an increase of three percentage points) said they have been targeted by a fraud scheme but did not become a victim of it. Unfortunately, 6% (an increase of two percentage points) acted on a fraud scheme and became a victim.

Phishing (40% of those targeted) and third-party seller scams on legitimate retail websites (29%) remain the most common COVID-19-related digital fraud schemes encountered by consumers in the Philippines, with shipping fraud (24%) coming in close at third.

“We’ve seen in the both the digital fraud attempts monitored by TransUnion’s fraud analytics solutions and the responses of consumers on ground that fraud remains a persistent global problem. As we continuously work to regain our economic progress, it is crucial that businesses, consumers, and the government approach recovery holistically. This entails creating programs and actions in response to insights similar to those we’ve shared, while at the same time maximizing the available digital solutions that can help fast-track results and accelerate growth in areas that it is needed most,” Arellano said.

*TransUnion’s global Consumer Pulse study highlights the ongoing financial impact of COVID-19. The most recent survey includes responses from 1,100 consumers in the Philippines and was conducted online between June 1 and June 16, 2021. For previous Consumer Pulse Studies, visit our Consumer Pulse study page.

1CISP offers support to mostly underprivileged communities by providing their cooperatives with life and non-life insurance products and wider financial services. Its tech partner—TraXion Tech—is a systems integration company that specializes in transaction management systems. Together, the two organizations launched and operate the DigiCoop website where cooperative members can apply for loans, insurance, and investments, pay bills and other financial commitments, and access the DigiCoop virtual marketplace, among other capabilities. The website provides a convenient online platform that supports financial inclusion in rural areas.

Under the partnership, TransUnion will provide 1CISP and its member-cooperatives a reliable credit scoring and reporting system integrated and ready to use within the DigiCoop platform. This finally gives cooperatives visibility on their members’ off-books credit behavior, enabling them to assess the creditworthiness of their existing borrowers and new applicants more efficiently and effectively and at a reduced cost. It will help cooperatives better manage their portfolio and lend with greater confidence, empowering them to be more competitive and allowing them to grant more and bigger access to credit to their community.

There are approximately 3,000 cooperatives serving members such as farmers, government employees, and teachers nationwide that will benefit from the partnership. Through TransUnion’s solutions, 1CISP member-cooperatives will be able to offer them more tailored products and services that are reflective of the member’s individual finances whilst offering a faster and more convenient loan application process.

“Technology plays a huge role in terms of providing services, and DigiCoop and our other initiatives have played an important part already during the pandemic. With the addition of TransUnion’s solutions, we can extend our reach and fulfill our responsibility of providing protection and risk mitigation to the communities and members we serve,” said 1CISP President Roy Miclat. “Grassroots finance has been performing well during COVID-19 and we want to reinforce this position. Our partnership with TransUnion enables us to further enhance cooperative lending capabilities. With better insights, they won’t have to manually process every loan that comes, accelerating their decision-making when extending credit services.”

Mainly catering to rural areas, cooperatives are crucial in sustaining the livelihoods of communities and empowering marginalized members by providing opportunities for economic and human capital development. During the pandemic, most cooperatives under 1CISP grew 8-10% in membership as many consumers were pushed to seek financial support in coping with the economic impact of COVID-19 on their communities and household finances. To address the sudden surge of members, 1CISP and TraXion Tech launched the DigiCoop platform to be able to reach and onboard cooperative members despite the social distancing protocols and continuously provide them access to credit and digital financial services during these difficult times.

“As a tech provider, one of the biggest pain points in serving the communities is the lack of infrastructure. Alongside 1CISP and TransUnion, we enable cooperatives to virtually roll out services that they were only able to provide traditionally. By integrating TransUnion’s services into the DigiCoop platform, cooperatives now have access to better insights and intelligence that will help them mitigate and weigh the risks that go along with providing their members the loan that they require. At the same time, members are able to boost their capability and expand their access to the different financial services provided by the cooperatives,” said Ann Cuisia, TraXion Tech CEO.

As part of the data-sharing agreement, 1CISP will also contribute its cooperative data to TransUnion’s database and strengthen the insights it is able to provide. In the end, it will become a true bayanihan effort that empowers all stakeholders to work towards achieving countryside development and nation-building goals.

“This partnership is a great milestone because it enables us to reach more underserved consumers and be instrumental in giving them access to the financial services they need. We’re proud to work with organizations like 1CISP and TraXion Tech that share our vision of improving financial inclusion to ensure that no Filipino gets left behind. This is only the beginning. It will be an ever-evolving process as we onboard more cooperatives into TransUnion and customize our solutions to tackle their specific needs,” said TransUnion Philippines President and CEO Pia Arellano.

TransUnion initiated its Consumer Pulse study, a survey of adults in the Philippines and abroad, to better understand the financial impact of COVID-19 on consumers. The initial Philippine survey (conducted from March 5–22, 2021) of 865 adults marked the first by TransUnion in the country and is part of what is planned to be a series of ongoing research.

“Whether it’s their financial health, financial wellbeing, or changes in day-to-day living, the lives of millions of people in the Philippines and abroad have changed dramatically because of COVID-19. The Philippines, like many other countries, has had extended periods under lockdown, and we continue to manage the ongoing impact as the number of cases remains high. The aim of our regular Consumer Pulse research is to better understand the financial impacts of the pandemic and better inform consumers, businesses, and government decisions during these unprecedented times,” said Pia Arellano, TransUnion Philippines president and CEO.

Among the respondents whose household income is currently negatively impacted, 45% said they or someone in their household had lost their job, 42% said they or someone in their household had had their work hours reduced and 24% said someone in their household owned a small business that closed or had orders that dried up. As a result, it has become even more challenging to manage household budgets.

Of those whose income is currently negatively impacted, 88% said they are concerned about their ability to pay their current bills and loans in full, with 48% reporting they will not be able to pay their bills in less than four weeks. Among those whose household income is currently decreased and has these bills and loans, 47% said they would be unable to pay their mortgage, 41% auto lease, 36% house/rental insurance and 35% credit card.

In addition, consumers whose household income is currently negatively impacted have made changes in their approach to savings or debts. Almost half (47%) reported they had cut back on discretionary spending, while 31% cancelled/reduced digital services, among other budget changes. Meanwhile, 48% said they had saved more in emergency funds; 26% had paid down their debt faster; and 19% had saved more for retirement.

TransUnion’s research also found that fraudsters are adding to the pressure, taking advantage of consumers’ move to the digital space in the conduct of their lives during the pandemic. Forty-four percent of respondents claim they have recently been targeted by digital fraud related to COVID-19, with 4% having acted on a fraud scheme and are now a victim. Gen X respondents (born 1965–1979) have been most susceptible to falling for digital fraud related to COVID-19 with 9% of this generation indicating they had acted on attempts and become a victim. The top pandemic-themed digital scam for those targeted with COVID-19-related digital fraud is phishing at 40%, followed by third-party seller scams on legitimate retail websites at 31%.

Recovery Plans

In response to the financial challenges posed by COVID-19, Filipino consumers surveyed cited several ways they plan to address their obligations. Forty-nine percent of those who reported their household income currently negatively impacted said they planned to use their savings to pay current bills, and 44% said they would borrow money from a friend or family member. Meanwhile, 45% said they would pay a partial amount, and 17% plan to take out a personal loan to pay their current bills or loans. For context, nearly one-third (31%) of Filipinos are in the medium risk credit range (those who say their credit score is 750–789 – i.e. EE-FF)*, and nearly a third (31%) do not know their credit score.

Among all survey respondents, more than a quarter (28%) said they have received a financial accommodation such as deferral, forbearance, payment holiday or eviction prevention in the past year. Among those with these bills, 21% have gotten an accommodation for life insurance or a personal loan, and 18% for either an auto lease, credit card bills or medical bills (all at 18%).

On a positive note, only 6% of those with accommodation said they weren’t prepared at all for when their financial accommodation period ends, with almost half (49%) saying they were very well or completely prepared.

Some respondents did acknowledge expected changes in household spending over the next three months, with 48% of all respondents saying they planned on decreasing discretionary personal spending e.g., eating out, travel, entertainment; 45% will decrease large purchases e.g., appliances, cars; and 43% will increase spending on bills and loans e.g., housing, utilities, insurance, credit cards.

“Financial hardship due to the pandemic is broadly felt across all markets that TransUnion surveyed. At this time of prolonged uncertainty, it is important that there is a dialogue between credit institutions and their customers. To help consumers, lenders are now incorporating alternative and trended data into their lending strategies. Leveraging such information can result in more informed decisions and trustworthy relationships between consumers and lenders, which is especially important as uncertainty has reigned over the credit landscape during much of last year,” Arellano concluded.

More information about TransUnion’s global Consumer Pulse studies is available here.

# # #

*TransUnion Philippines score card risk grade definitions are: AA-BB 830-900; CC-DD 790-829; EE-FF 750-789; GG-HH 700-749; II-JJ: 300-699

Before the pandemic, the percentage of the Filipino population that was credit visible was increasing with growing momentum, and although it has continued to increase during COVID-19, the rate has slowed significantly. When COVID-19 hit, financial institutions shifted from a growth mindset characterized by increasing customer acquisition volumes, 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.

Unfortunately, developments on increasing the banked population and extending loans to entrepreneurs or consumers hoping to take the next steps in their lives (e.g., owning assets like property) were derailed or delayed by the pandemic. There are still tens of millions of Filipinos who aren’t credit visible and as such could have limited access to credit products and other services. However, as the country moves to recuperate from the economic impact of COVID-19, TransUnion believes that the key to recovery lies in regaining the growth mindset, backed by the power of information.

“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. 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,” said Pia Arellano, TransUnion Philippines president and CEO.

In the modern economy, 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, whilst more accurately predicting risk.

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 (as a result of only interacting with lenders not previously sharing data) 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.

Old problems, new solutions

As the pandemic has continued, more challenges have surfaced for financial institutions. Prolonged lockdowns and subsequent rises 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.

In addition, as people have had to live their life more online under pandemic restrictions, the demand for financial services that are obtained via digital platforms has 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 and other new players, all while dealing with the rise in attempted fraud cases during the pandemic, especially during its early days.

TransUnion’s contribution has been the introduction of new core solutions which tackle old problems that came 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.

“Our advocacy for re-establishing a growth mindset to aid economic recovery is underpinned by our promise that we can help create a reliable basis for mutual trust between lenders and consumers. At this point, our 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.

2020 forced shifts and developments in businesses, and 2021 is the time to focus on sustainable growth and greater stability. Implementing and streamlining strategies for the digital space remains a key focus 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.

Arellano concludes: “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. Together, we can all succeed.”

There is no standard measure of financial health as each person’s circumstances are unique, but there is one aspect to finance that is often misunderstood, and that is credit. Credit is an important part of the economy because it allows entities and consumers to engage in transactions now that may not be possible if they only rely on their current capacity.

Anyone who has a credit card, loan, bank overdraft, or other similar credit agreements has a credit report – a record of how they manage their credit obligations, collected and aggregated by credit agencies like TransUnion. When borrowers honor their obligations, there’s no reason to see credit in a bad light, especially as it helps the economy grow faster this way. But how do you manage credit in the middle of a pandemic?

“A healthy credit history can help determine a consumer’s ability to access financial products and their ability to get competitive deals. At TransUnion, we are working with financial institutions to help them better understand consumers so they can continue to provide them with the financial services they need. TransUnion’s data quality assurance team stringently reviews credit data contributions and ensures that consumers are being accurately represented so their access to financial services remain unhampered during the challenges presented by COVID-19,” said Pia Arellano, TransUnion Philippines president and CEO.

Regulatory and institutional safeguards notwithstanding, there are a number of habits that consumers can practice to maintain good credit health even amid a pandemic:

1. Pay bills on time

Make it a point to not miss any payment deadlines, even if you can only pay the minimum amount. Automate it if possible or set alarms if you must. The purpose of a credit report is to help lenders see whether or not you miss payments and predict a behavior pattern for the future.

There are grace periods accorded to consumers during the pandemic, so it’s best to be aware of the policies implemented by your bank or financial institution for your convenience. Depending on your case, you may need to contact them directly to arrive at a repayment plan that suits your needs at present. However, if you can pay as soon as the bills come in, do so and you’ll have less to worry about.

2. Set a budget and stick to it

The economic impact of COVID-19 is likely to extend over many years and having the discipline to stick to a budget and not over spend now will benefit you in the long run. In addition, do not apply for several new accounts at a time. Having a lot of simultaneous inquiries on your credit report worries lenders as it is a sign that you might be using credit and loans to supplement your income because you are spending beyond what you can actually afford.

3. Maintain low balances

Credit cards are considered “maxed-out” when you have spent 90% or more of the credit limit. When you maintain lower balances, lenders view you as someone who uses their credit responsibly. To achieve this, you should be able to pay your bills in full, on time, every time.

4. Build a strong relationship with lenders by being a responsible borrower

Lenders recognize that with higher credit limits comes increased responsibility. Credit limits tend to be reflective of both your wider financial standing as well as historic account conduct. A high credit limit reflected in your credit report can signal to lenders that you are a trustworthy candidate for new lines of credit. Should an unprecedented event such as this pandemic arise, you know that you’re in a position to access financial products at competitive interest rates if you need to.

5. Beware of phishing and other scams that proliferate even during crises

A recent TransUnion report found that fraudsters are decreasing their schemes against businesses but increasing COVID-19 focused scams against consumers online. With the rise in digital transactions in banking, make sure you do not fall victim to fraud activities like account takeover or unauthorized account opening schemes that can taint your credit report. As a general rule, steer clear of offers that sound too good to be true. Legitimate financial institutions can never provide miraculous results in the short-term. Other precautions include doing a regular review of your bank accounts for any suspicious activity, never providing sensitive information such as PINs and One-Time Passwords, and keeping your information secure against phishing attacks. It’s worth looking into password managers and updating your passwords on your bank accounts every so often. If you need to communicate with your bank, stick to its official channels.

6. Contribute to a savings fund

Building an emergency fund is generally considered good practice in your overall budgeting and serves to keep your credit health in check as well. Having enough funds on hand will help cover credit obligations, keeping you in good credit standing until you recover and things stabilize again.

Navigating the road to economic recovery

Build and keep the above-mentioned habits and you’ll maintain a good credit standing and overall financial health. Now, what should you do if you still cannot pay your bills at this time due to sudden loss of income or other extreme circumstances?

Consumers should coordinate with their bank or financial institution to explain their situation. Generally, consumers can request a payment holiday, lowering of monthly payments until they have fully recovered, or restructuring of a loan or credit facility for a smaller payment amount and longer tenure. Needless to say, it helps if you are in good credit standing to begin with.

As a seasoned and trusted global data steward, TransUnion recognizes its unique position to help consumers as they pursue economic recovery by helping financial institutions address current uncertainties using the power of information. Building on its database of 25 million account points that features a more holistic and insightful view into consumer behavior, TransUnion has started harnessing trended data that looks at richer information from a longer period of time (24 months payment history) to determine a consumer’s current and likely future financial situation. This, in turn, gives businesses quality information to continue supporting customers even in uncertain times such as the pandemic. When done right, everyone contributes to helping the economy bounce back stronger.

“We’ve been called to do bayanihan to recover as one, which essentially recognizes the need for us to work together to fully address current financial challenges. Our mission at TransUnion is to use the data that we have to help businesses and consumers make smarter finance decisions, especially during difficult times like this pandemic. We hope to continue creating a virtuous cycle of empowered businesses that empower consumers to gain access to financial services which can uplift their lives and financial health, as we believe this contributes a great deal to their physical and mental well-being too,” said Arellano.

For more information about maintaining your credit health, you may visit TransUnion’s FAQ page.

Already available in other TransUnion markets, TransUnion Seamless Onboarding has been recently launched in the Philippines to help both financial institutions and consumers experience an end-to-end digital (or digital-assisted) onboarding process that delivers a friction-right experience, while increasing conversions and loyalty, reducing fraud, and driving operational efficiencies.

Delivered via a single platform and a single API that significantly reduces integration time and effort for financial institutions, TransUnion Seamless Onboarding encompasses identity verification, fraud prevention, credit risk decisioning, and service orchestration to bring a differentiated and holistic solution to the Philippine market. As an example for consumers, this means being able to instantly apply for finance products like credit cards via mobile or at a branch near the point-of-sale and getting approved soon enough to be able to snag a store promotion for 0% installment exclusive to that credit card.

“Improving customer journeys may seem like an insurmountable task. Financial institutions are often reliant upon legacy or multiple systems and have to choose between maintaining those systems and developing new platforms. At TransUnion, we have focused on designing a service that delivers a full range of solutions that are easy to integrate for our customers, and our flexible orchestration and plug-and-play offering is configurable to meet evolving business needs. The service helps institutions rise above new challenges, including competition from progressive FinTechs, and help them create an environment and experience where in the end, both the provider and the consumer win,” said TransUnion Philippines President and CEO Pia Arellano.

Addressing Consumer Pain Points and Risk of Fraud

Even before the pandemic, financial providers in the Philippines faced large dropouts during onboarding both offline and online, largely due to inconvenient, confusing, and time-consuming application processes and slow turnaround. Recent studies by TransUnion Philippines found that most banks’ digital channels use application forms that are very cumbersome and provide a poor and lengthy customer experience. When applying via a website, the process could take over 40 minutes, as entry fields are often redundant.¹

In many instances, if applicants lose internet connection midway while filling in a form, they often need to restart the application from the very first page. Completed applications, meanwhile, require the consumer to go through a lengthy and manual verification processes involving multiple interactions with the bank agents. At bank branches, queues tend to be long and the verification is done manually or sometimes over the phone. On the other hand, turnaround times from credit application to approval take eight days or longer for 42% of credit cards, 51% of installment loans, and 91% of auto loans.²

Digital application processes that are not fast and easy and that don’t effectively balance the consumer experience with risk management can cause financial institutions to lose large numbers of potential customers, especially amid a fast-growing local financial services industry driven by technology trends. TransUnion Seamless Onboarding eases the burden of manual review and stitched-together onboarding setups from multiple providers. With this, financial institutions can deliver a streamlined experience wherein consumers can complete their application in one sitting – anytime, anywhere – without compromising their privacy or security.

Customer safety when doing online transactions is even more important now as a recent report by TransUnion found that suspected fraud originating from the Philippines during the period from March 11-April 28 increased by 119% compared to the pre-ECQ levels. With TransUnion Seamless Onboarding, the Philippines’ financial services industry will be able to address the increased risks of fraud that come with the rise in digital transactions as people continue to observe social distancing.

“TransUnion Seamless Onboarding encompasses a multi-layered fraud strategy that leverages TransUnion’s vast offline and online data, insights, and analytics to not only create a great experience for good customers but also effectively trap fraudsters. This way, we enable institutions to benefit from a more accurate risk assessment and reduced false positives,” Arellano said. “What we essentially offer is a holistic solution to the various facets of the digital journey within the finance industry, most especially in this uncertain business climate. There is significant opportunity to support digital transformation in the finance sector to further drive economic opportunity in the Philippines. While internet connectivity is yet to reach its full potential on this side of the globe, the current reality calls for innovative ways to reach the unserved and underserved markets, and TransUnion Seamless Onboarding may just be the missing link to finally close that gap.”

More information about TransUnion Seamless Onboarding can be found here.

¹TransUnion PH “mystery shopping” onboarding study, 2019. Statistics cover credit card and personal loan applications, averaged across channels and lenders studied.

²2019 TransUnion PH study on turn-around-times from credit application to approval for credit cards, installment loans, and auto loans

By analyzing up to 24 months of financial information, versus the conventional approach of looking at data at a single point in time, CreditVision provides a deeper understanding of the consumer’s current and likely future financial situation, enabling more accurate lending decisions. TransUnion’s CreditVision has empowered lenders to offer loans to millions of new customers and new-to-credit individuals in global markets and is set to transform lending in the Philippines where it is unique: the only trended data product available in the market.

CreditVision’s breakthrough capabilities come at an important time, as the economic downturn due to the pandemic is causing rapid shifts in consumer financial situations and changes in consumer actions. CreditVision builds on TransUnion Philippines' database of 24 million account points that features a more insightful, holistic view into consumer behavior. The trended data solution gives businesses the clarity and assurance needed to lend, predict risk, and continue to support consumers during uncertain economic times. More reliable and highly predictive trended usage and payment data becomes even more valuable when recent signs of consumer financial stress are invisible to lenders; now often the case under COVID-19.

“It is crucial for the finance industry to be proactively identifying both risks and opportunities early on to mitigate credit losses and strengthen customer relationships during these trying times. CreditVision provides a more stable view of which consumers represent good credit risk, positioning it to drive strong consumer and business benefits as the country navigates challenging economic conditions. It also helps those who were previously under the radar be considered as the additional variables and attributes now in play help lenders understand shifts or patterns in the consumer’s behavior, which will enable lenders to offer the right products,” said TransUnion Philippines President and CEO Pia Arellano.

Getting a more complete picture of a customer’s total debt obligation and payment behavior is key to getting an early indication of risk profile changes and being able to make the best decisions in this rapidly evolving crisis. TransUnion’s technology-assisted solutions are specifically crafted to strengthen capacities in order to help effect positive outcomes within the business community and the local economy as a whole.

Extensive Benefits

CreditVision’s trended credit data and proprietary algorithms help lenders achieve better results by truly understanding consumers’ needs and predicting future customer performance more accurately than traditional risk scores. It also allows organizations to lend with more confidence during the COVID-19 pandemic by providing a more comprehensive understanding of consumers who have over time represented good credit risk.

Designed specifically with account management strategies in mind, CreditVision allows lenders to understand consumer behavior to a degree not previously possible, giving a dynamic view of changes in balances, shifts in utilization, payment amount, payment history and more. In contrast to traditional models, lenders can see whose credit behavior is improving over time.

With CreditVision, lenders can both manage losses by pinpointing consumers showing signs of financial stress and improve the customer experience, offering better rates and terms on credit products. This empowers lenders to effectively manage risk and find new revenue opportunities.

TransUnion’s CreditVision delivers strong benefits and creates significant value across the consumer lifecycle, including:

• Onboarding applicants who may otherwise have been rejected;
• Reducing acquisition costs; and
• Improving decisioning across score bands with more granularity and accuracy.

Demonstrated Effectiveness

First launched by TransUnion in the United States, CreditVision has proven highly effective in regions where TransUnion has comprehensive credit data, including Canada, India, Colombia, South Africa, Hong Kong, and, most recently, the UK.

TransUnion India, for instance, saw a client achieve a 28% increase in approval rates at the same risk when using trended data through CreditVision. Meanwhile, TransUnion South Africa saw clients achieve as much as a 56% increase in risk predictability, a 20% improvement in approval rates, and a 29% decrease in bad debt amounts on portfolios when using this approach.

“The bottom line is that being able to predict where a consumer’s performance is heading is actually much more important than where they are at a certain point in time. Prediction enables lenders to say yes to consumers more often because it enhances trust: lenders can see good payment performance of consumers in the past that were never visible before,” said Arellano.

“Some who never qualified for credit before will now be available in the lending market. In the same way, lenders can now offer competitive rates to a new generation of consumers, allow consumers to build up their credit background and increase economic opportunities. As such, the launch of CreditVision in the Philippines represents a major milestone,” concluded Arellano.

For more information or to learn how to benefit from TransUnion’s CreditVision solutions, get in touch through the website by clicking here.

“We all have a responsibility to support businesses and consumers however we can, and we at TransUnion are uniquely equipped to help not just our customers but the wider industry and the Philippine economy as a whole. Despite the unprecedented situation the global economy is now in, businesses cannot afford to be hasty, especially when we have data to help guide their decision-making processes. TransUnion’s mission is to deliver information for good and we’re keen to support the government in its aim of promoting greater economic stability and strength in our country, especially amid these extraordinary times,” said Pia Arellano, TransUnion Philippines President and CEO.

Inasmuch as doctors diagnose patients before prescribing medicine or treatment, TransUnion’s portfolio health check service provides various lenders with a comprehensive view of their borrowers’ credit relationships across multiple lenders, together with portfolio risk management tools such as credit scores and credit attributes that reliably identifies and segments the high risk versus the medium and low risk customers in the portfolio.

Consumers’ situations can change very rapidly especially during economic downturns, and it can be very challenging for lenders to identify high risk accounts from low risk accounts and optimize their portfolio performance if it is not being monitored regularly. The more frequently the portfolio is reviewed, the greater the ability of the lender to effectively mitigate increasing portfolio delinquencies and losses and bring about better portfolio health.

In support of the government’s planned program of interventions, TransUnion is briefly opening up its portfolio health check service to non-members and has already reached out to key financial industry stakeholders like FintechAlliance.ph, the trade association of key players in the fintech industry in the Philippines. Being custodians and stewards of comprehensive financial data across almost 24 million trade lines/accounts to date (and growing), TransUnion can provide critical insights that will help financial institutions proactively manage their portfolio. It will also help define appropriate strategies to respond to consumer concerns and extend tactical help such as targeted interventions like emergency loans.

“We believe in building and expanding a sustainable digital finance ecosystem that benefits every Filipino, and for that, we cannot waver from our duties no matter the situation. If we are to succeed in this fight, fear or pressure should not trump our better judgment. FinTechAlliance.ph is encouraging all members and other financial institutions to participate in this endeavor so we can all work as one and do everything in our power to protect and revive our economy,” said FinTechAlliance.ph Chairman Lito Villanueva.

Enterprise rehabilitation

Small businesses and microenterprises play a significant role in developing the Philippine economy, yet they are among the most greatly affected and further marginalized by the current situation. Along with the millions of daily wage earners, MSMEs will benefit most from the loans and other forms of financial assistance that lenders are planning to roll out to help reboot and recover losses due to the lockdowns. TransUnion’s credit profiling will give lenders a clearer line of sight on their customers and help them approach any government directive with confidence.

“DTI recognizes that thousands of small-scale businesses are being affected by the enhanced community quarantine, with a majority being forced to shut down for the time being. While we have measures in place like grace periods for rent payments and other programs that provide funds for concessional lending to MSMEs, portfolio health check empowers banks and lenders to act confidently knowing they are managing risks while continuing to extend support to consumers and MSMEs. We need our financial institutions to continue extending loans with favorable terms to help our MSMEs to recover so that they can revive their businesses and get back on a growth track,” said DTI Secretary Ramon M. Lopez.

Given the Mandatory Grace Period and non-imposition of interest on interest, fees, and other charges for all loans with dues falling within the ECQ period as stipulated in the Bayanihan to Heal as One Act (R.A. 11469), TransUnion Philippines has proactively reviewed its data reporting policies and issued guidelines to arrive at the most optimal data contribution structure to prevent the impact to affected consumers while also maintaining the accuracy and integrity of the bureau databases so lending activities can continue. In general, these guidelines aim to ensure that the consumer’s current credit data position remains to be reliable for the duration of the emergency Payment Freeze or Mandatory Grace Period.

“Our aim at TransUnion has always been to provide our customers with critical data and powerful insights, which will allow them to make quicker, better, and more informed decisions. If we can bring a little more certainty to this unpredictable world by providing such data and insights to all the players in the financial industry, we believe we are one step closer to achieving our mission of information for good,” Arellano said.

Financial institutions interested in availing the free portfolio health check service only need to ensure that they have the necessary consent from their customers as required in the Data Privacy Act. As a global big data company, TransUnion is backed by sophisticated technology that ensures data security and compliance with local and international data privacy laws. The offer is valid until further notice. For inquiries and other details, contact Karen Dioso, Senior Manager, Business Partner Solutions from TransUnion at KarenAstrud.Dioso@transunion.com.

More information about TransUnion Philippines and its suite of solutions may be obtained at the website https://www.transunion.ph/

Banks and other financial institutions have everything to gain in harnessing disruptive technologies like big data analytics in their operations as even the Bangko Sentral ng Pilipinas (BSP), the country’s chief finance regulator, recognizes that the digital transformation of the financial services sector is the new frontier.

For TransUnion Philippines President and CEO Pia Arellano, “Information is a very powerful thing. Information drives business, opens doors, and empowers and enriches the lives of consumers. Change and transformation, however, can come with many implications, and the path to innovation and new technological solutions is not necessarily always an easy one. It involves courage, a willingness to learn and evolve, and a consumer-first mindset.”

The use of big data, with its capability to collect, process, and analyze information in large volumes, has been continuously driving innovation and the transformation of the landscape within the banking industry. Financial institutions are adopting big data analytics to gain a competitive edge and better serve their customers as they continue to augment and improve the intricate complexities of their banking operations that result from the rapid proliferation of data.

According to a BSP-published research paper, big data for the finance and banking industry is all about making better sense of customer behavior to achieve more accurate assessments of customers’ creditworthiness, risk appetites, and qualifications, while at the same time enabling financial institutions to offer improved products and services to their clientele.

Big data’s economic impact

Big data is the extensive collection of varying information that can be generated and analyzed at optimal speed and mined for informative and analytical purposes. However, the majority of finance companies that participated in a study by TransUnion and Versta Research said that data and analytics are evolving faster than their own internal capabilities. Together with ever increasing consumer expectations, the evolution of data and analytics poses a challenge for businesses to analyze data in the speed the market demands.

To meet with the challenge, insights from the study show that business leaders use analytics tools as a competitive advantage to yield more room for growth. TransUnion, for instance, has started to harness the power of trended and alternative data to more accurately predict credit risk. Its members can now leverage this power to cross-sell the right products to the right customers.

Big data analytics benefits both ends of business interaction. It not only pushes industries to identify and resolve certain business deficiencies, but also allows them to better understand their customers and better meet their needs. On the other hand, it serves as an avenue for consumers to be able to relay what they need and expect from their product and service providers, and, in turn, be heard.

“The vast amount of information produced by businesses every day, coupled with continued technological advancements, is becoming the catalyst for the acceleration of the global economy. The big data chain ultimately leads to knowledge and solutions, which present new opportunities that will enable a new range of products and services for both the business end and the customer. On a larger scale, big data affects the global economy more significantly than we realize, and it will continue to do so as technological advances further progress,” Arellano said.

TransUnion Philippines is a sophisticated, global risk information provider and credit bureau dedicated to finding innovative ways information can be used to make better and smarter decisions. It provides analytics, integrated solutions, insights, and other invaluable information that facilitate objective, fast, and reliable credit decisioning for lenders. TransUnion Philippines holds an annual Big Data Summit that gathers industry thought leaders and stakeholders to tackle current issues and developments in the hopes of opening dialogues and exchanging ideas aimed at moving the industry forward. For more information about TransUnion Philippines and its suite of solutions, visit the website https://www.transunion.ph

For years, rural banks have served as the main access point for basic financial services for a large number of Filipinos, providing deposit and credit facilities to communities in which they operate. The data-sharing partnership with TransUnion, which will see a greater number of lenders contributing information to consumer credit reports, is expected to help RBAP members further enhance their consumer offering.

With credit information sharing including positive information on payments that Filipinos are successfully maintaining, consumers will potentially have access to new or additional loans as rural banks become better able to manage risk and assess a consumer’s creditworthiness.

“Our partnership with TransUnion will help facilitate an increase in business coming into rural banks. By using data-based, analytics-driven solutions, we expect the volume of lending to grow as the decision-making process becomes more fluid. Ultimately, this will have a positive impact on the bottom line of each member rural bank. For RBAP, the partnership continues to make true the promise that the Association made to its members ─ Walang iwanan (No one is left behind.),” said former RBAP President Dr. Armando Bonifacio.

“The availability of accurate and more extensive credit information is an important catalyst to an efficient credit ecosystem which can help fuel and support further economic growth. Providing rural banks with a more complete picture of a person’s creditworthiness helps open up more financial possibilities, giving consumers access to credit that might have been inaccessible to them before this partnership,” said TransUnion Philippines President and CEO Pia Arellano.

“When lenders utilize more complete credit information, it enables them to make more informed lending decisions – benefitting them and the consumers they serve. TransUnion prides itself on using ‘Information for Good’ and this new partnership has the potential to benefit consumers, businesses, and the Philippine economy as a whole.”

The collaboration will open up the possibility of new lines of credit for much-needed investment and a wealth of other opportunities. TransUnion’s comprehensive suite of solutions and its commitment to data quality standards will also help protect Filipinos from fraud by helping validate and check genuine applications for new financial products.

“Rural banks are, by design, champions of financial inclusion. Our partnership with RBAP is a huge milestone as it will only strengthen that mandate and allow rural bankers to address modern challenges through the power of information. In the end, all of it supports our own efforts at expanding Filipinos’ access to credit and making sure that economic growth is inclusive,” continued Arellano.

RBAP was founded in 1955 to promote the general welfare and safeguard the interests of rural bankers, as well as study and devise ways and means of making rural bank facilities more responsive to the needs of people in rural areas. Since then, it has been instrumental in promoting comprehensive rural development and expanding productivity to raise the quality of life, especially of the underprivileged.

A leading global risk and information solutions provider, TransUnion works on a data-sharing model and provides consumer reports, risk scores, analytical services, and decisioning capabilities exclusively to member businesses. These members embed TransUnion’s solutions into their own process workflows to improve their capabilities in areas like customer acquisition, assessment of consumers’ ability to pay for services, debt collection, consumer identity verification, and investigation into potential fraud.

TransUnion Philippines was incorporated in 2011 by the country’s five biggest credit card issuers ─ BDO, BPI, Metrobank, Citibank, and HSBC. It is backed by a sophisticated technology infrastructure that helps ensure data security and compliance with privacy laws. For more information about TransUnion Philippines and its suite of solutions, visit the website https://www.transunion.ph

TransUnion is a comprehensive credit bureau and information solutions provider in the Philippines, which now features more than 20,700,000 account records in its database as of April 2019. This is a remarkable 570 percent increase from the baseline data of almost 3,100,000 total account records in 2012.

Of the total number of account records, approximately 13,700,000 are open trade lines (e.g. open mortgages, credit cards, loans, bank overdrafts as well as other credit agreements) from a total of 8,800,000 unique consumers.

Over 50 organisations, such as banks and other financial institutions, contribute information and are currently active in the TransUnion Philippines ecosystem. About 20 more are onboarding soon, particularly from the rural banking sector. In addition to the largest commercial banks and credit card issuers, increasingly telecommunications companies and fintechs are contributing data for the benefit of consumers.

TransUnion provides substantial coverage, scope, and accessibility of credit information. Its consumer credit reports include important data such as repayments and any delinquencies. This allows member organisations to see a more accurate representation of the current financial standing of the consumer, so they can properly manage risk when providing credit and advance them the most appropriate product.

“The market is maturing at an incredible rate and is providing more and more benefit to Filipinos. Modern credit bureaus feature positive information about how people are maintaining loan payments, which in turn can provide them with access to further financial products at potentially more competitive rates,” said TransUnion Philippines President and CEO Pia Arellano. “Many Filipinos still don’t have a credit report, or have an incomplete credit report, and often find it difficult to open mainstream financial products. The increase in members contributing information to our database means we are able to help address this and increase financial inclusion.”

Confidence in the quality of data is also important. TransUnion does stringent checks during member onboarding in order to protect consumers and help ensure the information held is a true reflection of their credit history.

“The availability of accurate credit information is an important catalyst to an efficient credit ecosystem which can help fuel and support further economic growth. It’s ultimately about openness and collaboration. We’ve been working closely with our members for seven years now and businesses and consumers are seeing the benefits this brings,” Arellano said.

Based on current trends, TransUnion expects to see an increase in reporting of two to three million more trade lines by the end of 2019. The recent signing of rural banks will greatly contribute to achieving this target, and TransUnion is also encouraging utility companies, cooperatives, and the insurance industry to become new partners.

“Our data expansion efforts are well underway. We’ve been in talks with various industries, educating them about our solutions and the benefits it can bring for them and the consumers they serve. TransUnion believes in using information for good. We’re working hard to grow the credit ecosystem further, so that both businesses and consumers can harness its power,” Arellano said.

TransUnion works on a data-sharing model where members contribute updated information across their customer database, including payment history, in return for access to the data of other members. This helps members gain a more complete understanding of a consumer’s credit history. Apart from its extensive database, TransUnion also supports clients with analytics, integrated solutions, insights, and other information so businesses can manage risks while consumers can manage their credit. It is backed by sophisticated technology to help ensure data security and compliance with data privacy laws. For more information about TransUnion Philippines, visit the website https://www.transunion.ph