Fintech and Financial Inclusion – Manila Bulletin

TECH4GOOD

The rapid digitization of everything we do today is rapidly changing the country’s economic inclusion landscape. Although the percentage of the unbanked population in the country remains one of the highest in the Asia-Pacific region according to Statista research, the rise of financial technology or fintech innovations such as digital payment systems, mobile banking and online service kiosks have encouraged more unbanked Filipinos to use them to access financial products and services. The convenience they gain from using these innovations is so compelling that, just like the use of social media, the fintech phenomenon is rapidly becoming integrated into the social fabric of Philippine society. Just like the rest of the world, it is revolutionizing the local financial industry and promoting financial inclusion.
The basis for this to happen was already there before the pandemic, with over 75 percent of Filipinos owning smartphones and having relatively high digital skills. Fintech companies are able to provide financial services to underserved and low-income populations that would not normally qualify to open regular bank accounts. This is important because it allows these people to become part of the country’s financial system, helps to improve their economic stability and opens doors to different opportunities.

Today, the use of fintech has become almost ubiquitous. Digital payment brands like GCash, Maya, GrabPay, Lazada Wallet, Coins and Shopee Pay all offer very convenient ways to pay, transfer money and even save. Companies such as BTI, a subsidiary of Banktech – a leader in ATM and payment technology in Australia, build and deploy payment kiosks and independent ATMs in places very close to where people live, work and shop. Just like the use of digital wallets, BTI kiosks provide real-time postings of transactions done through their kiosks. All of these digital facilities allow individuals to access financial services and products that can be particularly useful in areas where there are few traditional brick-and-mortar banks. They are also driving the growth of e-commerce as merchants, mostly MSMEs, can now easily access external customers and get paid instantly using digital payment systems.

We are also seeing the rise of fintech, such as Plentina, which offers alternative lending options that make it more affordable for customers to pay for items that are otherwise not within their financial capacity to pay if they are paid once. Traditional banks may be hesitant to lend to certain individuals due to a lack of credit history. Fintech companies, on the other hand, will typically use alternative data such as social media or mobile phone usage to assess the creditworthiness of potential borrowers.

Most of the dominant fintech companies in the country today are backed by large business conglomerates such as GCash by Globe and Maya by Smart. Some of them are part of large regional digital platform players such as Grab and Lazada. BTI, on the other hand, brings to the Philippines decades of expertise and experience in transaction processing and payment device management in locations such as Australia, India and Southeast Asia where it owns and manages more than 16,000 payment devices. As an independent ATM deployer, they are EMV certified, compliant with local regulations and fully accredited by BancNet, the country’s national ATM network. BTI recently favorably closed a case against them before the Philippine Dispute Resolution Inc. (PRCDI). BTI sees this as an opportunity to move forward and focus on its higher goal of serving an essential market need and aligning with the strategic direction of the Bangko Sentral ng Pilipinas (BSP) to accelerate financial inclusion in the country.

There are other benefits fintech companies can offer their customers. For example, they can help make financial services more affordable due to lower fixed costs compared to traditional banks. They also help increase financial literacy and education by providing educational resources and tools such as budgeting and savings platforms to help individuals and entrepreneurs better manage their finances.
Despite the many benefits of fintech, there are also challenges to consider, such as potential security breaches and privacy concerns. It is very important for fintech companies to prioritize security measures to protect their customers. So far, the BSP has been very proactive in providing clear guidelines to provide regulatory certainty in this new industry. We can only hope that the agency remains open as it is now to new financial services business models.

Despite these challenges, the potential for fintech to promote financial inclusion and improve the lives of individuals and businesses around the world is enormous. By providing easy and convenient access to financial products and services, fintech has the opportunity to level the playing field and give ordinary Filipinos and entrepreneurs the tools they need to succeed.

Financial inclusion is essential for a thriving economy like the Philippines. After all, as long as the unbanked remain excluded, the country cannot hope to achieve economic progress.

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(The author is chief negotiator for the Alliance for Technology Innovators for the Nation (ATIN), vice president of the Analytics Association of the Philippines, and vice president, UP System Information Technology Foundation.)