Fintech, the economy’s elixir Bytes

MANILA, Philippines — The Philippines is a burgeoning digital hotspot in Asia.

We are the first Asian country to deploy Elon Musk’s Starlink. Our digital infrastructure can now accommodate technologies of this caliber, thanks to the government’s expansion of internet services. Inclusive access to satellite broadband not only makes room for foreign technological developments – it also unlocks enterprise opportunities for Filipinos as far-flung as the countryside. Soon, previously “disconnected” island barangays can have access to affordable and reliable data with a speed promise of about 200 mbps.

Binance, the world’s biggest crypto exchange, is expanding operations in the Philippines. Not only is the Philippines among the world’s fastest adopters of crypto, but we also have an impressively high number of non-fungible tokens (NFT) owners. An art tech enterprise known as Unit 256 was recently formed to aid institutions in art preservation and to make local works accessible to all. Filipinos have been very quick to embrace emerging technologies such as these. The potential for wealth and income enhancement is a major pull.

How we interact with data – and with each other online – is revolutionizing. Web 3.0, the metaverse, and the new digital economy are now within the sphere of privacy by design. It is where virtual expands reality!

Now, let’s give credit where it’s due. These rapid developments have been made possible by the government’s unwavering support towards the fintech and digital banking industries. The Duterte administration championed financial inclusion and innovation through socially-relevant and mobile-first regulations that include the National ID System or PhilSys, the mandatory use of digital across all national and local government units for payments, collections, and disbursements, the Philippine Innovations Act, the Financial Consumer Protection Act, and amendments to the Foreign Investments Act, the Public Services Act, and the Retail Trade Liberalization Law. These are just among the landmarks legislations that further improved investor confidence in the Philippine digital finance sector.

The BSP, led by its dynamic and progressive former governor and now Finance Secretary Benjamin Diokno, also helped accelerate the country’s pace of digitalization and financial inclusion. Early on, he helped roll out the standard payment QRph and eGov, among others. Like a true rockstar, he did not let the hard lockdown throw a wrench in the BSP’s plans. During this challenging time, they released two game-changing regulations – the digital bank licensing guidelines and the open finance framework. These regulations propel us closer to the aspired outcomes of the digital payments transformation roadmap – to digitalize at least 50 percent of retail financial transactions and to onboard a minimum of 70 percent of adult Filipinos into owning transaction accounts by the end of 2023.

FinTech Alliance.ph, since its inception in 2017, has been an ally and partner to the government in its dedication towards the digital finance industry. As the premier digital organization of startups and unicorns, our group collectively contributes in excess of 90 percent of fintech-initiated transaction volume in the Philippines today. In our strategic collaboration with the BSP, we developed hand-in-hand the national retail payments system and the national strategy for financial inclusion that made way for the InstaPay and PESOnet payment rails. These expansions ushered in growth the pandemic.

Our book, Uncharted Beyond: The Taxonomy of Fintech in the Philippines, defines the major pillars and enabling laws in the digital finance space. FinTech Alliance.ph is also a partner to key agencies in combatting cyberfraud and money laundering. We nurture our continuing engagements with the BSP, the Securities and Exchange Commission, the Insurance Commission, the Credit Information Corporation, the National Privacy Commission, the Department of Information and Communications Technology, and the Anti Money Laundering Council Secretariat. Both houses of Congress would always involve the alliance for its insights, recommendations, and views on important pieces of legislations concerning emerging technologies, financial inclusion, and digital finance.

The alliance institutionalized Asia’s first industry-led code of conduct and code of ethics as supported by all regulators, including the Bureau of Internal Revenue and the Department of Trade and Industry. We also laud SEC’s creation of PhilFinTech Innovation Office. This initiative paved the way for more innovations in the fintech industry to further promote financial inclusion and protect investors and financial consumers.

Our continuing global engagements are just as thriving. We are a strong partner of several global organizations, including the Ant Group’s 10 x 1000 financial inclusion technology advocacy; UK Prosperity Fund on industry sandbox, Center for Alternative Finance of Cambridge University on ASEAN Digital Finance Access survey, and various European governments through their embassies on a number of digital initiatives.

With all these strides in the last few years, we are confident to see further growth under the new leadership of President Marcos. We look forward to working with the present administration. Fintech Alliance.ph stands ready in submitting its seven-point digital agenda, namely:

1. Incentivizing digital person-to-micro payments to accelerate adoption and innovation.

2. Promoting digital markets, trade opportunities and optimization of the Personal Property Security Act to give better credit access to MSMEs.

3. Creating a comprehensive ecommerce roadmap where all related government agencies work towards driving down the cost of data to benefit Filipinos in rural poor areas.

4. Strengthening of consumer protection mechanisms against fraud and cybercrimes through acts like the SIM registration bill.

5.  Institutionalizing digital IDs and digital signatures.

6. Enhancing digital skills training and education in state colleges and universities, and technical and vocational institutions.

7. Harnessing digital talents to meet high demand for professionals and experts locally and abroad.

Digital finance will continue to grow in the Philippines. This momentum hinges on continued partnerships, collaboration, and innovation among industry players.  According to research conducted by economic consultancy firm, AlphaBeta, the Philippines’ digital economy can create up to P5 trillion or  $ 91 billion through digital transformation by 2030, representing approximately 27 percent of GDP in 2021.

The Philippines is not only on its way to recovery. Rather, we are growing into our own power – a promising frontier of opportunities for financial technology to flourish.

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Lito Villanueva is the Philippines’ award-winning thought leader on digital transformation and inclusive digital finance.  He is the executive vice president, chief innovation and inclusion officer of RCBC. Concurrently, he is the chief digital transformation advisor for the YGC. He is also the founding chairman of Fintech Alliance.ph, the Philippines’ largest organization of digitally-enabled companies that generates over 90 percent of FinTech-initiated transactions volume in the country today.