The Business Times: E-wallet Fintechs Prosper In The Philippines By Targeting The Unbanked
October 12, 2022
Singapore’s well-capitalized digital banks have made a splash lately with targeted offerings to wrest market share from the incumbents. The real change, however, is taking place with much less aplomb across South-east Asia – where niche fintechs are finding a newly receptive audience for their digital products.
The Philippine central bank, Bangko Sentral ng Pilipinas (BSP), has been working to raise digital adoption and financial inclusion by offering regulatory and policy support to players offering cheaper or innovative products and solutions. Its targets are to have half of all transactions digital, and 70 per cent of Filipino adults to have formal banking accounts by 2023.
During the pandemic, the Philippine government started distributing social security benefits electronically instead of in cash. This encouraged people to open a bank account to receive the benefits, said Anosh Pardiwalla, principal at Oliver Wyman.
Targeting the underserved
Oliver Wyman’s Pardiwalla said traditional banks do not pay a lot of attention to the less-affluent segments as these are not as profitable. This situation could, however, change with the introduction of new technologies. He said: “Traditional banks have the legacy costs still piled up, so they’re not replacing it overnight with new technology. It’s the question of, in the long term, if they want to target this last segment.”
These e-wallet players are also emerging as important sources of funding for individuals, as well as micro, small and medium enterprises (MSMEs).
Challenges for digital banks
Industry watchers say there is much to do for BSP to reach its targets. Internet connectivity is also an issue for those living in rural areas, Oliver Wyman’s Pardiwalla said. “So you need to make sure what you’re providing is a very light model, rather than something that’s going to consume too much bandwidth,” he said.
Read the full article here.