PLDT unit, banks join hands to address inclusion gap

MANILA, Philippines – Financial institutions and financial technology firms (fintechs) are expected to drive growth and address financial inclusion gaps in the country, the PLDT Group said. 

Lito Villanueva, CEO of FINTQ, said more opportunities for collaboration are opening up for banks and other financial institutions with Fintechs. 

“Fintechs in emerging markets are not the enemy, but a strategic ally of financial institutions. I call it finbiosis, or a mutual co-existence that leverages on each of our strengths – technology and innovation for fintechs and financial expertise and capacity for banks,” Villanueva said.

 FINTQ is the financial technology unit of Voyager Innovations and PLDT. 

While fintech firms have ushered an age of disruption in the banking and finance industry in developed markets such as the US and European countries, the situation is starkly different in emerging economies such as the Philippines. 

“In emerging markets such as the Philippines, fintechs do not aim to disrupt. Instead, fintechs here enable cost and service efficiencies for partners, engage with regulators to adapt to the emerging digital landscape, and empower consumers with frictionless experiences leveraging on mobile,” he added. 

Collaborating with fintechs also helps in addressing financial inclusion gaps besetting the country today, as 69 percent of the population remains unbanked and only one percent of payments are done electronically.

 “There is a huge opportunity for fintech players to push their platforms that will address these gaps, and likewise, for banks to expand the reach of their products and services without heavy capital expenditures,” he said. 

Villanueva cited the case between FINTQ and Land Bank of the Philippines wherein P8.72 billion worth of loans in over 1,100 participating government agencies were released through the Landbank Mobile Loan Saver (LMLS) since it was deployed in January last year. 

LMLS is a solution to digitize the salary loan application process for government employees. Using only their mobile phones, employees could apply for a salary loan and get quick approval updates within hours. 

Through LMLS and mobile technology, Landbank significantly accelerated its salary-based lending velocity by as much as seven times, allowed 20 percent of applicants to apply for a loan outside banking hours, and reached 23 percent of borrowers in low-income cities and municipalities where no brick-and-mortar branch is present.    

In the same vein, financial institutions face a growing challenge to accelerate their digital transfromation in light of tectonic changes in the consumer landscape, driven by digital-savvy “millennials,” a third of which do not believe they need a bank at all, according to the 2015 Millennial Disruption Index, putting banks at the highest risk of consumer disruption.

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