Fintech Opportunities in the Philippines

By Dale Angeles

Financial Technology or fintech is defined as “online or digital technologies used for banking or financial services.” In today’s modern world, almost everything is digital. Most of us, if not all, have smartphones or access to the internet and spend most of the day on it. The thought of banking made easier with just a few clicks paved the way for fintech startups. This technology offers convenience since you no longer have to go out for your banking or financial needs. It’s especially suited for Filipinos, who spend so much time online — it really saves time.

Aside from being tech-savvy, a large number of Filipinos are unbanked, giving fintech companies a big market share. In an article published in Philippine Star, the fintech industry is growing in the country due to the adoption of e-commerce and other new technologies. According to the Department of Trade and Industry, there are 136 fintech companies registered in the country. These companies focus on alternative financing, blockchain, remittances, investment, and crowdfunding. The fintech market is valued at around $5 billion and is projected to grow to $10 billion by 2022. We can really see that fintech has that much potential and this is why more private organizations, as well as the government, are supporting it.

Last May 27, 2020, the British Chamber of Commerce Philippines (BCCP) hosted the webinar, “Philippine Fintech Opportunities.” Invited as speakers were Amor Maclang of GeiserMaclang, Jove Tapiador of Good Tech Holdings Inc., Mark Vernon of Tagcash Ltd, Peter Ing of BlockchainSpace Philippines, and Mark Gorriceta of Gorriceta Africa Cauton & Saavedra — all members of Fintech Philippines Association (FPA). The speakers talked about the current state of the fintech industry in the Philippines, what FPA is all about, and the technicalities of financial technology.

In summary, here are the main points:

• The Philippines is a hub for fintech due to high number of mobile users.
• Fintech has four pillars — digital banking, online lending, payments and e-wallet, blockchain and remittances.
• The Philippines has a positive regulatory environment. However, Filipinos, in general, have low trust in digital platforms and prefer cash over e-wallets.
• SMEs in the Philippines prefer single-payment providers.
• 70% of the Philippine population is unbanked.
• E-wallets and payments, such as GCash and PayMaya, have the biggest growth in 2020.

Fintech Philippines Association:

• The association is in partnership with Bangko Sentral ng Pilipinas, Securities and Exchange Commission, Philippine Deposit Insurance Corporation, and the Insurance Commission.
• It aims to create a healthy, cooperative business and legislative environment.
• Its verticals are real estate, insuretech, peeptech, govtech, and transport.

Mark Gorriceta also discussed government initiatives that support fintech companies:

• RA11293 Philippine Innovation Act — established an innovation fund to promote and support MSMEs, mandates the Intellectual Property Office to promote and streamline the registration of intellectual property.
• RA11057 Personal Property Security Act — recognizes personal and intellectual property as collateral.
• RA1137 Innovative Startup Act — protects and promotes innovative products, processes, and business models; allows small fintech players access to Startup Venture Fund to further support their research and development.

With the current pandemic, fintech has become even more relevant. Since we cannot go out that much, and banks and other financial institutions are limited, it is vital to take advantage of the options provided by fintech companies. The BSP and other institutions are promoting contactless transactions. With the new normal, more opportunities will surely come for the fintech industry.

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About the author:

Dale, a graduate of sociology, is an environment and animal welfare advocate. He enjoys running and joining marathons. Among his other interests are social development and marketing. He is currently a graduate student at De La Salle University.