2021 Challenges to PH Fintech startups

With the ongoing process of recovery from the COVID-19 pandemic, the numbers for remittances and e-payment systems skyrocketed all over the country due to the localized lockdowns and community quarantines.

The 2020 data shows that the Philippines has a more than
50% increase in e-commerce transactions.

The figures are mind-boggling: recent figures for the established Globe GCash payment system show that they currently have around 20 million accounts pre-pandemic. Last year, the Singapore-based tech firm BCB Blockchain entered into a partnership with QBO Innovation Hub and Animo Labs to provide startups planning and financing.

The past year has also shown great strides in e-commerce and online selling transactions. Lazada and Shopee had reported increased sales when the lockdowns were implemented in the second quarter of last year. Proportional to this is the widened utilization of digital banking technologies in the country. CIMB Bank has boasted growth of 3 million accounts during the pandemic time.

Filipino fintech startup SquidPay Technology sure made news in the Philippine Stock Exchange last year by acquiring a 55 percent stake in Premiere Horizon Alliance Corp ($PSE:PHA) to be used as a vehicle for its prospective backdoor listing at the Philippine Stock Exchange.

Launched just this May, SquidPay provides contactless payments services for Filipinos through stored value cards, QR codes, and a mobile application.

These updates in the fintech landscape in the Philippines are all well and good but there remain bigger issues - the narrowing of the digital divide and the creation of a better fintech ecosystem.

While indeed, digital transactions increased to comprise 20% of the total value in 2018 from just 8% in 2013, these figures are still comparatively low. A study by the Bangko Sentral ng Pilipinas (Philippine Central Bank) showed only 29% of Filipino adults had formal accounts in financial institutions as of 2019. In a study by HSBC, they indicated that in the Philippines, 53% of smartphone users do not have - get this - a credit card.

That's why for me, the pronouncements of the central bank are laudable. It hopes that by 2023, the BSP wants 70% of Filipinos to have access to a formal account. The central bank also targets to have 50% of transactions done digitally in the span of two years.

Government initiatives and support are seen as extremely important in fostering
a nurturing startup environment.

There is indeed a clear need for the creation and fostering of the fintech ecosystem in the Philippines. And while the figures are promising, it is indeed the partnership of bold entrepreneurs, dedicated men and women from our government agencies; both the Department of Trade and Department of Science and Technology.

After all, in developing countries it is not really about high-tech solutions but more about helping people solve their problems with creativity and innovation. I believe these are rife in this country.