A Cryptocurrency for Every Juan
Just a week after Celo unveiled Alfajores testnet, C Labs team members visited the Philippines to conduct a pilot of the Celo mobile wallet. I was elated to work as a Fellow to coordinate the pilot. When I first heard of Celo, its mission to provide accessible financial tools to everyone immediately resonated with me. The Philippines needs new and bold ideas like this to bridge the gap between the haves and have-nots.
I grew up in the Philippines, and my parents were entrepreneurs who had the opportunity to access credit for their own stuffed toy business. Our lives were transformed as the business flourished, and it enkindled in me a passion for expanding opportunity ever since. I always thought that our country is full of talent waiting to be unleashed.
In my time as a civil servant at the Philippine Central Bank, I have seen my country’s transformation as one of Asia’s fastest growing economies. Annual GDP growth has been above 6% in the past 5 years, and the Philippines is inching closer to its desire to reach higher middle-income status. Yet, amidst new condominiums and malls sprouting everywhere, many are still unable to enjoy the fruits of this new prosperity. Barriers persist to exclude many Filipinos from the formal economy. For the pilot, the team wanted to understand the Philippine context better and find ways for Celo to meet the needs of the financially excluded.
A need for financial access
One obvious barrier to achieving prosperity is access to finance. Recently, I wired money back home from a US bank and I had to wait an hour in line, fill long forms and pay high fees (~$65 or P3300). It was burdensome, costly and time-consuming. I could imagine what it’s like for an overseas Filipino worker (OFW) and his/her family at home who have to endure this regularly.
We are a middle-income economy, but not everyone could pay, save, or borrow on a daily basis without experiencing friction or hassle. Having lived in Manila all my life, I often take for granted the multitude of banks and financial service providers in the capital. Yet even today 1 in every 3 municipalities in the country still does not have a single bank.
Or consider the roughly 10 million Filipinos working abroad and sending home close to US$33 billion a year in remittances. This is the third largest volume in the world (after only China and India). Yet, remitting money is still an outdated process despite today’s technology and the country’s 63% smartphone adoption rate, .
For fintech players, this setting makes the Philippines an attractive market. Our young and vibrant demographic also means that smartphone adoption could go higher. Indeed, many startups have opened up shop to the point that the market is quite saturated and fragmented. The crypto wave also came, yet many are skeptical as they have fallen prey to scammers.
Given all these, it’s no wonder that the Philippines is an economy where cash is king. 92% of all transactions are still done in cash. Many people would still prefer keeping cash at home. I myself or minimum wage families would not risk our hard-earned income in unproven platforms or means. One is left thinking that the Philippines is a middle-income economy at the cusp of transformation, yet it seems to miss on the opportunity for technology to make things better.
What will it take for a solution like Celo to be responsive to this critical need for access? To answer this question, the team worked with 23 young Filipinos aged between 18–35 years old to download and test the Celo Wallet for 2 weeks. Most were minimum wage earners from Jollibee (a fast food chain) in Santo Tomas, Batangas Province, a peri-urban area south of Manila. We also invited 5 merchants to join and accept payments with Celo. These merchants sold various goods including snacks, electronics, accessories and other general merchandise.
It was an ideal environment to pilot the app and gain insights on the daily lives of Filipinos. Majority of the participants work in the same company and the merchants are just next to the restaurant. It enabled us to capture how people handle electronic money, and how businesses use electronic payments. We wanted to see what types of transactions will occur, and what versions of the Celo app would be most useful. In-depth interviews and focus group discussions also helped us not only learn more about their financial behavior, but also iterate on how the app could be useful to them. Here are important things we learned.
“When the internet is slow, it affects the transactions”
Any fintech solution would grapple with slow internet in the Philippines, with speeds even slower than Syria or Zimbabwe. As expected, the bursty connection that fluctuated between 3 to 10 mbps resulted in transactions taking time or failing to go through. The pilot focused its iterations on this challenge. The team shipped many updates to make transactions faster and more reliable despite the poor connection.
Moreover, many Filipinos still use old and obsolete smartphone models. For instance, one pilot participant was using the cheapest Samsung phone from 4 years ago. Inconsistent connectivity and outdated phones models are two realities to address for any project hoping to find success in the Philippines.
“I turn off my data when I am not using it”
Ingenuity runs in our bloodline. Filipinos love free stuff and life hacks, and it is a trait that manifests in mobile data usage. Many watch Youtube promotions and take advantage of referral bonuses for free data. Free or lite versions of Facebook and Viber are often included in load promos because people are reluctant to pay for data. It’s a tricky attitude to address if we aspire to be a digital economy. Moreover, it means that effective fintech solutions need to be data-light if they wish to reach scale.
“I thought it was a scam”
In the recruitment for the pilot, some prospects thought that it was a deception ploy, if not for local counterparts endorsing Celo and the team. Trust is a fragile issue in the Philippines, and we live in a low trust society. The reasons for this are multi-layered. Yet, it implies that anything new –however innovative — is met with suspicion unless family members or peers put their word for it.
Only 40% of our pilot participants heard of cryptocurrency before, but almost nobody has ever used or owned it. I would hypothesize based on experience that trust is a primary factor why e-money or digital payments are picking up pace only recently.
How Celo can help
As a formal central banker, I am a firm believer that financial technology can help upgrade the Philippine economy and Filipino lives. Imagine if Filipinos could use their phones to commute, buy food or invest minus the hassle and the sweat. Financial innovation can unleash growth, create more jobs and ease poverty at a wider scale than a cash-based economy could do.
Celo’s value as a stablecoin operating on a user-friendly mobile platform offers a lot of potential to make money more accessible for Filipinos. A participant shared that he “only saw payments by phone in Korean teledramas,” and was so happy being able to try it. It speaks to the need for an inclusive solution that is not limited only to urban people, advanced mobile phone users, or high-income earners.
Moreover, Celo’s open-source and decentralized nature attests to its transparency and trustworthiness. Stability of value and supply is also a key feature that Celo works on. This aspect is important for a monetary instrument to be reliable and secured, and would be an antidote to Filipinos’ risk aversion and low trust.
There’s still a lot to learn about the Philippines, and the team is looking forward to more research. We’re interested in how Filipinos download and trust financial apps, as well as how they switch from cash. The diversity in context and behavior across its 7,000+ islands is also another dimension to unpack. We are excited nonetheless what the future looks like: a time when every Filipino phone user could enjoy the power of blockchain and fintech in their everyday lives.