The global FinTech market is expected to reach $332.5 billion by 2028, according to the forecast of the Vantage Market Research.
This is coming from $112.5 billion in 2021, exhibiting a Compound Annual Growth Rate (CAGR) of 19.8% during the forecast period. Integrating artificial intelligence (AI) and efficient data management with business operations could trigger a Philippine FinTech revolution that will transform industries, according to AI-powered decisioning platform Provenir.
“The pandemic and its restrictions caused a huge generational spike in the eruption of digital services and has demanded that businesses adapt themselves at a very high speed,” said Provenir General Manager for Asia-Pacific Bharath Vellore.
To become part of this growth, organizations are expected to be offering financial services to customers to generate alternative revenue streams, personalize their customer journey, and improve the overall user experience soon.
This was shared by participants of the “FinTech: A people’s revolution in the Philippines” forum attended by some of the leading companies in the ASEAN and Philippine FinTech space.
From left to right: Mita Veloso, Special Projects Manager, Xendit Philippines; Zdenek Jankovsky, Corporate Treasurer and Executive Director, Home Credit; Amor Maclang, Convenor of Digital Pilipinas and Co-founder of World Fintech Festival Philippines; Bharath Vellore, APAC General Manager, Provenir (on LED screen); Christo Georgiev, COO and Country Manager, FinScore; Elross Pangue, Country Head, Finverse; and Nooky Umali, Co-founder and CTO, GoodBank
The future of FinTech
During the forum, Digital Pilipinas and World Fintech Festival PH Co-Founder Amor Maclang asked the panelists if the future of FinTech lies in the ability of enterprises to harness the potential of data and she received an overwhelming affirmation.
In addition, Vellore forecasted that the future of FinTech is the conversion of any business into FinTech: “AI in FinTech opens the doors for the digitalization of credit-rich verticals and diversifies products and capabilities. Agility and speed in personalization play critical roles in providing personalized offers to customers, aiding in hypergrowth,” he said.
However, FinTech is not limited to digital banks and neobanks, but broadens out to include embedded and open financial services that are becoming more and more prevalent.
The driving force for innovation and security
“With so much innovation happening in the FinTech space, there arises the question of how we can be more responsible and secure in our digital transaction for both businesses and consumers,” said Maclang.
It was revealed that smart tools like AI can transform large amounts of data into valuable insights such as consumer patterns that help with fraud detection and business risk decisions, as well as AI fraud detection is fast, efficient, and effective.
“AI also helps organizations discover new patterns in data that empower them to serve a much wider base of people,” adds Vellore. Moreover, AI can reduce transaction costs, improve data management, and increase employee productivity.
Financial inclusion through alternative data
Through AI, patterns can be identified in a wide variety of alternative, traditional, linear, and non-linear data. It can also power highly accurate decisioning even for consumers considered “thin-file” or those without files. This fosters financial inclusion as FinTech companies and financial services providers can support the unbanked, which is more than 70% of the population in Southeast Asia.
“AI can create alternative credit scores for the consumer loan space,” said Vellore. Alternative credit scoring can replace the traditional FICO score used by banks for consumer risk assessments and legacy underwriting, which are slow-moving processes in lending transactions.
‘Super apps’: being many things for your customers
Considering the surge of FinTech solutions catering to various users, 77% of financial institutions have put innovation as their focus to strengthen customer retention. These days, AI is conspicuous in mobile app features such as “frictionless” customer onboarding via face detection. However, this technology goes beyond the superficial.
AI can reveal complex and unexpected variables that cannot be derived by manual analysis alone. It can “advise managers on how to use the information to increase profit.”
“Through AI, an e-wallet is no longer just a channel for paying bills but is now also a bank, and it contains your investment portfolio, insurance, and so much more. A ‘super app’,” said Vellore.
Progress through AI adoption
Last year, the Department of Trade and Industry launched a national AI roadmap, making the Philippines one of the first 50 countries worldwide to do so. It aims to transform the country into a Southeast Asian AI powerhouse and leverage AI to boost local enterprises’ regional and global cooperation.
“Anchoring our nation’s progress with AI is a must. The collaborative efforts among the public and private sector, the academes, and our ASEAN partners have greased the runway towards the movement of money through the power of data,” said Maclang.
FinTech done the right way will power not just our country but the entire ASEAN to the next evolution towards digital transformation.