Fintech and financial inclusion

TECH4GOOD

The rapid digitalization of everything we do today is fast changing the country’s financial inclusion landscape. Although the share of the unbanked population in the country is still one of the highest in the Asia Pacific region according to Statista research, the emergence of financial technology or fintech innovations such as digital payment systems, mobile banking, and online service kiosks have encouraged more unbanked Filipinos to make use of them to access financial products and services. The convenience they get by using these innovations is so compelling that, just like the use of social media, the fintech phenomenon is fast becoming embedded in the social fabric of Philippine society. Just like the rest of the world, it is revolutionizing the local financial industry and promoting financial inclusion.


The foundations for this to happen are already there even before the pandemic with over 75 percent of Filipinos owning smartphones and relatively having high digital literacy. Fintech companies are able to provide financial services to underserved and low-income populations who usually would not qualify to open regular bank accounts. This is important because it allows these individuals to become part of the country’s financial system, helps improve their economic stability, and opens doors for various opportunities.

Today, the use of fintech has become almost ubiquitous. Digital payment brands like GCash, Maya, GrabPay, Lazada Wallet, Coins, and Shopee Pay are all providing very convenient ways to pay, transfer money and even save. Companies like BTI, a subsidiary of Banktech – a leader in ATM and payment technology in Australia, are building and deploying payment kiosks and independent ATMs in places very close to where people live, work, and shop. Just like the use of digital wallets, BTI kiosks provide real-time postings of transactions done through their kiosks. All of these digital facilities allow individuals to access financial services and products which can be especially useful in areas where there are few traditional brick-and-mortar banks. They are also driving the growth of e-commerce as merchants, mostly MSMEs, can now easily access remote customers and get paid instantly using digital payment systems.

We are also seeing the emergence of fintech, such as Plentina, that offers alternative lending options that make it more affordable for customers to pay for items that are otherwise not within their financial capacity to pay if paid one time. Traditional banks may be hesitant to lend to certain individuals because of a lack of credit history. Fintech companies, on the other hand, would usually use alternative data such as social media activity or mobile phone usage to assess the creditworthiness of potential borrowers.

Most of the dominant fintech companies in the country today are backed up by large business conglomerates such as GCash by Globe and Maya by Smart. Some of them are part of large regional digital platform players such as Grab and Lazada. BTI, on the other hand, brings into the Philippines decades of expertise and experience in transaction processing and payment device management in places like Australia, India, and Southeast Asia where they own and manage more than 16,000 payment devices. As an independent ATM deployer, they are EMV-certified, compliant with local regulations, and fully-accredited by BancNet, the country’s national ATM network. BTI has recently favorably concluded a case brought against them before the Philippine Dispute Resolution Inc. (PRCDI). BTI sees this as an opportunity to move forward and focus on its higher goal of serving an essential market need and align with the strategic direction of the Bangko Sentral ng Pilipinas (BSP) to accelerate financial inclusion in the country.

There are other benefits that fintech companies are able to provide their clients. For example, they can help make financial services more affordable because of lower overheads compared to traditional banks. They also help increase financial literacy and education by providing educational resources and tools such as budgeting and savings platforms to help individuals and entrepreneurs better manage their finances.


Despite the many benefits of fintech, there are also challenges to consider such as potential security breaches and data privacy concerns. It is very important for fintech companies to prioritize security measures to protect their customers. So far, BSP has been very proactive in providing clear guidelines to provide regulatory certainty in this new industry. We can only hope that the agency remains open-minded as it is now to emerging financial services business models.

Despite these challenges, the potential for fintech to promote financial inclusion and improve the lives of individuals and businesses around the world is enormous. By easily and conveniently providing access to financial products and services, fintech has the ability to level the playing field and give ordinary Filipinos and entrepreneurs the tools they need to succeed.

Financial inclusion is essential for a thriving economy like the Philippines. After all, so long as the unbanked remain excluded, the country cannot hope to achieve economic progress.

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(The author is the lead convenor of the Alliance for Technology Innovators for the Nation (ATIN), vice president of the Analytics Association of the Philippines, and vice president, UP System Information Technology Foundation.)

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