November 23, 2020
3 min read
Fintech startup investments comprised 80% of the Philippine total in the past two and half years. The space has attracted both homegrown and regional startup companies with founders betting on the growth of Philippine financial inclusion and digitized financial services.
Investments into Tencent-backed Voyager Innovations bolstered sector share of investments to reach above 80% in 2018 and 1H2020. This is attributable to the Tencent and Alibaba proxy war that continues to be waged, and is accelerating digital payment adoption in the Philippines. According to KapronAsia, Alibaba-backed GCash saw payments made on its platform rise 700% year-on-year in May, and they plawn to partner with government to install scan-to-pay systems in taxis. Meanwhile, rival PayMaya is partnering with Makati Medical Center for telemedicine, and also the city of Manila to enable QR code payments at stalls near Manila City Hall and the bargain shopping area, Divisoria.
THE PHILIPPINE FINTECH INDUSTRY IS GAINING GLOBAL ATTENTION FOR ITS REMARKABLE GROWTH
In 2019, Startup Genome named Manila as one of the world’s friendliest cities for fintech startups, owing to the city’s strong English language skills and well-established outsourcing industries. The Global Startup Ecosystem Report 2020 forecasts fintech’s transaction value to increase by 24% in 2020, accounting for the impacts of the COVID-19 pandemic. Moreover, Findexable, in its Global Fintech Index 2020, places the Philippines at rank 46 globally in terms of Fintech Country Rankings, 8 places above its Global Startup rank.
According to the Department of Trade and Industry (DTI), the number of fintech startups is growing at an average rate of 16% annually. As of early 2020, the Philippines is home to 136 fintech startups, comprising 26% of the startups in the country. 29% of fintech startups are in alternative finances, while 22% are in payments, 19% are in blockchain technologies, and the remaining 30% are involved in remittances, investments and crowdfunding.
“We strongly believe that this is a pivotal moment for us to become more relevant and competitive in the global marketplace. DTI has always been supportive of the growing fintech industry because of its massive potential for financial inclusivity for our people. With all the work and tech innovation building up in the country in recent years, we are ready to expand our horizons.”
From Department of Trade and Industry Undersecretary,
Dr. Rafaelita Aldaba Source: fintechnews.sg
Fintech is expected to grow substantially in the coming years. 47% of respondents in the 2020 Philippine Startup Survey reported that they have funded local fintech startups.
In 2019, the Philippines ranked 5th worldwide in promoting financial inclusion, based on the Economist Intelligence Unit’s Global Microscope 2019 study. The aim of financial inclusion continues to assure strong government support and initiatives that propel growth of the fintech industry. The Bangko Sentral ng Pilipinas (BSP) has identified digital payments as a priority in its policies, and has targeted digital payments to comprise 20% of total payment systems by 2020. Government support is also apparent in the Philippine Bureau of the Treasury’s partnership with Union Bank of the Philippines, and Philippine Digital Asset Exchange, a local startup, to launch a distribution of retail treasury bonds on the blockchain. The digital payments annual growth rate is estimated at 27-30% compared to an average of 25% among other emerging Asian nations.
Organizations such as the Fintech Philippines Association and Fintech Alliance Philippines have also been actively promoting innovation and collaboration within the fintech community. Along with milestone successes such as Coins.ph being awarded Southeast Asia’s leading blockchain-enabled platform or PayMongo raising one of the largest seed rounds in the country in 2019, and the recent USD 175 million investment into Paymaya Philippines through parent company Voyager Innovations, the fintech industry continues to lead the startup ecosystem to a brighter future.
Finally, the entry of neobanks such as TONIK financial show that fintech solutions are growing from simple payments to more comprehensive services such as digital banking. Neobanks are setting their sights in the Philippines because of the opportunity to tap the 77% of Filipinos who remain unbanked.
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