Filipino Household Finances Improve Amid Continued Economic Recovery

More Filipinos’ household finances have improved over the last three months, according to the Q3 Consumer Pulse Study by TransUnion, 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, 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 - 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.