Exploring the Fintech revolution in the Philippines

By Brian Dy, Research Manager at Kickstart Ventures

Originally published at the Kickstart Medium Page

Addressing financial inequality in the Philippines means making certain that everyone has equitable access to financial services. To date, some 66 percent of Filipinos remain unbanked, catapulting the Philippines to fourth place among the world’s most unbanked countries. However, we also have the advantage of high Internet and smartphone penetration at over 70 percent each, as well as a supportive central bank (Bangko Sentral ng Pilipinas, or BSP).

This environment is highly conducive for FinTech platforms to flourish and address the financial divide. With the right support and innovation, FinTech companies can unlock better access to digital payment solutions, democratized investments, digitized traditional financial services, and even new verticals such as e-commerce for all Filipinos, driving the Philippines’ digital economy to greater heights.

Photo from CNN Phlippines

Current landscape of FinTech in the Philippines

Due to our large Overseas Filipino Workers (OFW) population, which numbers in the millions, remittances have always been a driver of the need for innovative financial services. That catalyst, along with the recent emergence of supportive government programs and regulations such as Startup Pilipinas and the Innovative Startup Act, has propelled the Philippines to newfound FinTech prominence.

Manila was named by Startup Genome as one of the world’s friendliest cities for FinTech startups in 2019. This year, UOB reported that the total funding for FinTech firms in the Philippines for the first half of 2021 reached US$342 million*, more than double year-on-year. FinTech startups currently comprise around 15 percent of Manila’s startups, with over 200 operating across the country, and FinTech also makes up 8 percent of Kickstart’s deal flow in the last 12 months as of September 2021.

The COVID-19 pandemic has also had a hand in accelerating this fledgling growth. Remittances, cash flow, income generation, and even regular shopping activities took a hard blow during the pandemic due to travel lockdowns, job cuts, depressed spending, and health safety concerns. The need for remote, contactless financial services spurred a sharp rise in the adoption of FinTech services, with ATM withdrawals and check payments declining sharply as digital payments soared.

*This figure is almost entirely derived from the funding rounds of GCash and Voyager Innovations, with NextPay in third place.

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