The Philippines, with a steadily growing economy, burgeoning millennial population and high mobile penetration, has been ripening for digital disruption in the financial services sphere, according to Mynt vice president and corporate communications group head Ney Villaseñor.
“The opportunity is huge considering that 66 percent of Filipinos do not have bank accounts, 34 percent of municipalities have no access to banks and the credit bureau in the country is still in its infancy that an astounding 90 percent lack a credit score,” he says.
The Bangko Sentral ng Pilipinas has made it its mandate to promote digital finance through the National Retail Payment System, a framework that establishes high-level policies, standards and governance principles that cover retail payment operations and infrastructures.
With the aim of hastening the establishment of an effective electronic retail payment system and promote a “cash-lite” economy, the framework promotes interoperability among payment system participants through cooperative arrangements called automated clearinghouses, which allow funds including e-money to be sent from any account to any account.
Reducing the amount of cash transactions and transforming them into digital ones will eventually bring significant benefits for almost everyone as speed and efficiency of transactions could help bring down costs while promoting transparency and improving security and expanded access to financial services, Villaseñor says.
He says that at GCash, operated by Globe Fintech Innovations Inc. (Mynt), the framework and the policies released by the central bank in recent years are an inspiration for the fierce battles that it will face in the coming years.
“The central bank is our mighty ally in the war for financial inclusion. With the framework now in full swing, we are aligned with the vision of bringing digital, cashless convenience to the Philippine market and beyond that, educating and empowering the unbanked and underserved to have access to financial products previously out of touch due to conservative and traditional banking policies and regulation.
Aside from promoting financial inclusion, the goal of the NRPS is to increase the share of non-cash transactions from a measly 1 percent in 2013 to 20 percent in 2020.
“At Mynt, we have three primary investors that we can draw our strengths from—Globe Telecom Inc., Ant Financial of Chinese billionaire Jack Ma and Ayala Corp. This trifecta brings in the legacy of Globe’s GCash, a trusted brand in the country’s mobile money landscape, as well as the retail footprint of Ayala through its shopping malls and merchant network across the country,” he says.
“Now add to this the technological innovations and consumer insights of Ant Financial being the world’s largest digital payments provider and the result is a reinvigorated GCash mobile app. More so, with a newfound operational efficiency, technical skill set and risk management, Mynt is able to offer beyond remittance and bills payments. GCash customers can now have access to credit, insurance and investments with digital convenience with a flick on their phone screens,” says Villaseñor.
“In our drive to scale up, we have meticulously segmented its target market and practical uses where its products will be relevant. From students receiving allowances to employees sending money to loved ones across the archipelago, GCash has a solution to a wide range of financial needs at a cheaper cost relative to traditional means [such as domestic remittance via pawnshops],” he says.
Innovation also comes in the form of GCredit, which can lend money to individuals who would not have been able to access traditional bank loans or credit cards. The back-end of this innovation is taken care of Fuse, a wholly-owned subsidiary of Mynt.
Aligned with the NRPS, another critical component to sustaining the relevance of GCash is the payment acceptance ecosystem in traditional retail and online e-commerce space.
GCash leads the industry with its robust portfolio of brands and establishments accepting QR payments—from food outlets, clothing and groceries. Enterprise solutions are also part of the business verticals being pursued by the company such as loan disbursements and payroll for SMEs who cannot afford to maintain expensive bank accounts for their employees.
Getting a GCash account is now more convenient than before. With biometric identity capabilities that enables face authentication, anyone who wants to have the app no longer has to take out time to manually fill out forms and line up in a physical store for a face-to-face verification.
With the KYC (know-your-customer) procedure electronically democratized by the NRPS as e-KYC, a live video call is all that is needed to get accounts fully verified. This innovation definitely accelerates financial inclusion in the country while at the same time still compliant with the Anti Money Laundering Act and is considered to be one of the best practice in the industry, says Villaseñor.
“Still, the Philippines is still much of a cash-based economy and it will take some time to transform considering the cultural and practical attachments to cash transactions. The ambitious goal of increasing the non-cash transactions volume to 20 percent of the total is an ambitious goal, but it is still doable,” he says.
Villaseñor says to support the government in its endeavor, Globe has sustained its partnership with over 12,000 stores for account holders to convert their cash into electronic money. The cash-in procedure is made more convenient as it involves no cost to the customer, unlike other products in the market right now.
The GCash platform, a zero-rated mobile application by Globe, is available to its 60 million subscribers anytime without consuming their data allocation.
“Now that is truly financial inclusion and digital money convenience at the Filipino’s fingertips,” says Villaseñor.
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