Gearing to become next hotbed for fintech
Armed with a mostly young and digital-savvy populace, a fast-growing economy and an innovation-ready regulatory environment, the Philippines is positioning itself to be the next hotbed for fintech and financial innovation.
On May 20 to 21, some 1,200 fintech (financial technology) experts, thought leaders and participants in the burgeoning ecosystem are expected to attend the first Philippine Fintech Festival (PFF), which is expected to be a catalyst for bringing together enterprises and their ecosystems in the fourth industrial age.
Justo Ortiz, chair of Fintech Philippines Association (FPH) and the Distributed Ledger Technology Association of the Philippines (DLTAP), said in a briefing on Monday that lifespans of corporations and enterprises were getting shorter while uncertainties arising from technology were becoming more disruptive.
“But they can also be positive. They can be a force for good, force for development, force for progress, as long as we consistently are aware of the megatrends,” Ortiz said.
Ortiz, who also chairs tech-savvy UnionBank, refers to a future where customers want to interact using their preferred interface, where people from the ground reclaim power to demand for the right solutions, where enterprises will have to be “deconstructed” because specific functions–such as those relating to human resources, enterprise resource management, customer relationship management or logistics supply chain–could be served by external platforms at a much lower cost.
But beyond the passive show of technology and the panel discussions, Ortiz said the upcoming PFF would also offer the “tech experience zone,” an interactive multi-sensory experience of emerging and advanced technologies and how these apply to industries and enterprises.
The first PFF, which will be held at the Shangri-la at the Fort, is backed by various government agencies, including the Bangko Sentral ng Pilipinas. It is also a sister festival of the annual Singapore Fintech Festival organized by the Monetary Authority of Singapore.
Trade and Industry Undersecretary Rafaelita Aldaba noted that the Philippines was at a pivotal moment to become more relevant and competitive in the global marketplace.
“With more than 500 start-ups valued at $378 million, the Philippine start-up ecosystem is still young but it is full of potential and embedded capabilities. There’s plenty of room to grow such as in bridging the gaps in business services, in tech and financial inclusion,” she said.
She explained why fintechs can thrive in this market: Majority of the more than 100 million population have mobile subscriptions, 71 percent are active internet users but a very small portion of the population have credit cards or bank accounts.
The PFF “promises to be a showcase of the latest technological innovations both here and abroad to local and international businesses” and will “definitely go a long way in helping us develop the country’s capability for innovation through the continuous development of ICT,” DICT Undersecretary Jose Arturo de Castro said.
Based on an industry study cited by the BSP, the transaction value of the fintech market is expected to grow at an annual rate of 16.4 percent to reach $10.5 billion by 2022, from $5.7 billion in 2018.
Nonetheless, the industry is facing several constraints, foremost of which is access to funding. Compared to funding available for start-ups elsewhere in the world, funding for fintech and start-ups is much lower, said John Januszczak, CEO of UnionBank’s fintech arm UBX.
“Adoption is also very fragile. We have a lot of solutions that work in other countries but we have very unique circumstances here so it’s not always easy to adopt. But this is where the opportunity is because this is where the gaps are,” said Arvie de Vera, senior vice president and head of fintech group head at Union Bank.
“For instance, you’d think that credit scoring is something that’s easy to do but it’s not. There are local nuances that they have to adjust to,” he said. —Doris Dumlao-Abadilla
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