Household finances have improved over the past three months, according to the third quarter Consumer Pulse Study by TransUnion, a global information and insights company.

The study, which surveyed 1,000 adult Filipino consumers from 6 to 24 July 2023, also showed that more Filipinos are comfortable owning credit products and completing digital transactions.

Almost half, or 44 percent, of Filipino households reported increased income in the last three months.

The shift towards credit products and digital payments corresponds with consumers embracing digital banks and financial technology (fintech) companies such as e-wallets.

Technology firms have strengthened their foothold in the market even as more Filipinos expressed concern about their safety from cybersecurity threats.

More Filipinos are optimistic about income and household finances.

Alongside the 4.6 percent gross domestic product, or GDP, expansion in the second quarter were 52 percent of Filipino respondents who reported better than planned household finances during the third quarter alone or  an increase of three percentage points from 49 percent in the second quarter.

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

Growing comfortable with credit

Almost all, or 96 percent, of respondents to the survey conducted in the third quarter 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 owning credit accounts such as loans and credit cards increased by six percentage points to 41 percent in the third quarter, up from 35 percent in the second quarter.

This growing comfort with having credit products is also seen in the future plans of more Filipinos.

More than half the respondents, or 51 percent, indicated they were planning to apply for a new personal loan within the next year, an increase of five percentage points from 46 percent in the second quarter.

"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," Pia Arellano, president and CEO of TransUnion Philippines, said.

She added "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, fintechs rise

The study's findings also show that Filipinos are accessing credit products from new sources: 32 percent of respondents said they have existing credit cards or loans from banks without physical branches which offer financial products and services processed through digital platforms, while 26 percent said they have a loan from a fintech firm.

However, 42 percent of respondents 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 a  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 percent of third quarter respondents cited real time approval when applying for a digital loan being important to them, an increase of three points from the previous three months.

Cybersecurity, a concern

When asked about how many of their transactions are done over the Internet, 58 percent 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 percent expressed concerns about cybersecurity threats.

When it came to the cyber threats respondents reported being most concerned about, nearly two-thirds (65 percent) cited stolen identities, over half (51 percent) data breaches and 45 percent, 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 percent 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," Arellano said.