AS A SEPTUAGENARIAN, I am hugely envious of young people who have an easy relationship with current technology.
It seems that all we need to navigate much of the commercial landscape these days is a debit/ATM card and a cellphone. We also need to be in funds! This is a challenge for most of us, but it is a challenge that many overcome.
According to Bangko Sentral ng Pilipinas (BSP), 77 percent of Filipinos are unbanked. This is regrettable. Why is this? Are banks perceived to be ‘supplado’? Do banks need an articulate advertising/marketing campaign? Yes!
Would it help banks if by offering ATM/debit cards, they recruited more customers? I believe it would. Each bank would expand, there would be more business per bank staff member, and average usage of ATM machines would increase. The additional accounts, albeit small on average, would be marginally profitable and bank business would expand.
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Not all innovations are consumer-friendly, however. I am uneasy about the extraordinarily high rates of interest associated with credit. In fact, although I am in favor of less government restrictions as opposed to even more, I believe it would be helpful if a Republic Act were passed which compelled financial institutions to state a truthful annual percentage rate of charge (APR) on their credit instruments.
For example, the financial technology company Cashalo has recently joined forces with Cebu Pacific (CEB) to attract CEB’s customers on a “fly now, pay later” basis. There is a five percent processing fee in addition to a monthly interest rate, reportedly 8.75 percent. I hope there is an error with this quoted interest rate. Otherwise the APR is outrageous.
The five percent processing fee can be paid in three or six monthly installments. If paid in three months, this corresponds to an APR of 21.55 percent. Then we have to find the APR of the monthly interest rate.
Those who borrow money in which up-front fees as well as interest charges apply, are often fooled into thinking that the overall APR is much lower than it actually is. Hence the need for legislation forcing credit companies to be honest about the true APR.
In any case, CEB has an excellent “pay now fly later” system which I hope is not impaired by the expensive “fly now pay later” product./PN
