Thursday, October 12, 2006


The Philippine Banking industry needs a major overhaul. We will never get far with the current set-up that we have. It is a system so stacked against the little investor and provides major benefits to the super wealthy, just like everything else. Now that we don't have much of a middle class, Philippine society is rapidly being transformed to the very wealthy who can afford to stay, the struggling middle class finding ways to leave the country and able to get by only through the intercession of relatives overseas and the desperate poor with no options.

Try opening a savings account here and they will demand from you 3 separate forms of identity--just following the law they say, against money laundering! The process takes half an hour and is not at all a friendly and convenient experience. In the US, they even offer free toasters and dinners to attract your business. Depositing money, repeat, putting money in another bank branch will cost you $2! It must be because the cash is still physically transferred from one branch to another and this entails armored vehicles and security personnel or whatever. Interest rates are dismal and service charges are all over. This system plainly does not encourage people to save. In the US, paper checks are fast becoming anachronisms. By not transacting electronically, the Philippines is not even part of the game.

This is the result of a patronage-based banking system where banking laws are drawn by patronage-seeking lawmakers pretending to understand the arcane banking rules that are necessary to support a growing economy. Another example of why we are in such a mess.

No comments: