The Philippine fintech landscape
Credit to Author: The Manila Times| Date: Fri, 10 May 2019 16:21:41 +0000
To say that new technology in the financial sector has created a paradigm shift in the Philippines is an understatement. While most financial transactions were done through cash or check before, now we have plenty of online payment options. We owe this convenience to the advancement of financial technology (fintech).
Fintech
In the past, fintech was a vague term that encompassed various forms of technological advancement found at the backend systems of financial institutions. But as technology evolves, so does fintech. The fintech industry has adopted a more concrete and more consumer-oriented definition, paving the way to fintech services available today—technologies that aim to improve and automate different areas in the financial sector by providing businesses a tool for managing and growing their financial operations more effectively while making financial transactions easier for consumers.
Fintech in the Philippines
The Philippine fintech landscape comprises 8 segments, with online payments, alternative finance, and blockchain/cryptocurrency being the biggest ones.
With the ease it brings to consumers, it’s little wonder why online payment providers hold the biggest chunk of the Philippine fintech landscape. Some of the more well-known startups in this segment include Ayannah, Coins.ph, GCash and Moneygment. Despite this trend, Bangko Sentral ng Pilipinas (BSP) Governor Nestor Espenilla Jr. says majority of all transactions in the country to date are still paid in cash.
The second largest segment, representing 30 percent of the fintech landscape, is alternative finance. Fintech companies in this segment include Acudeen, Banko, Cropital, First Circle and Lendr.Lastly, we have blockchain technology and cryptocurrency, with 16 percent of fintech companies. Citadax, Buy Bitcoin.ph, and MergeCommit are all under this segment.
According to the Asian FinTech Census 2018, Philippine fintech companies were able to raise $78 million investment funding in 2017 (13 times more than the fintech investment funding for 2016).
Is fintech secure?
A common concern about fintech is security. Is this a valid concern? Should we be worried about data security when we do online transactions?
Cybersecurity could be a problem if we fail to use the necessary precautions to ensure data privacy and security. The basics of cybersecurity include using a firewall, installing anti-malware programs, and choosing strong passwords so online accounts are not easily hacked. More importantly, be mindful of the companies you transact with. As a rule of thumb, fly-by-night companies are not to be trusted. Before starting any transaction, research a company and get feedbacks about their products and services. Find out if there are issues and glitches linked to them so you can make a decision.
A good fintech company understands the importance of data security. They invest in strong security measures to ensure their company lives up to high-quality service delivery sans any form of data breach.
Investments that ensure data security could be costly but forward-looking companies know that the benefits of fintech solutions override the upfront costs.
The fintech advantage
From an observer’s perspective, it’s easy to see the convenience fintech offers to businesses and consumers. But actually, there are a lot more advantages we get from it. Here are some of them:
Fintech helps financial institutions deliver more efficient services. By improving performance and delivery, these institutions get more opportunities to grow and increase profit.
They companies make room for better loan portfolio diversification. By making financial services more customized, they cater better to the needs of their customers.
Fintech collaborations help speed up transactions. By offering secured services that take less time to accomplish, fintech companies can identify and address industry-specific pain points.
Fintech companies tap into the intuitive use of data. By using them, businesses will have a better way of knowing how customers spend their money. This could help them
invest in businesses tailored to what consumers are after.
They make payment systems a lot better. They speed up processes and make it more convenient for customers.
They improve customer relations. By keeping customers satisfied with the speed and quality of the services delivered, businesses will have better chances of retaining their customers.
They help speed up the approval process. Because the request for approval was coursed online, it is better to track, review, sort and respond to the sender.
They are all for connectivity. By allowing consumers to use their smartphones to access records and make financial transactions, the overall process becomes streamlined.
The emergence of fintech startups
As companies acknowledge how indispensable fintech solutions have become, they also started to seek out highly agile and data driven mechanisms to compete with the bigger, more technologically advanced firms. This is where fintech startups come in.
Fintech startups bridge the gap between consumer demands—which have become more customized and personalized to date—and the growing requirements of small and medium enterprises (SMEs). By automating processes and making them easily accessible, fintech startups allow SMEs to join the competition without compromising the quality of their services at the expense of a shorter turnaround time.
Currently, fintech companies are game changers in the Philippine business landscape. As an entrepreneur, you should use these fintech solutions to your business’ advantage.
Christian Pacquing Nacorda is the Brand and Communications Lead for First Circle Growth Finance Corp. He joined the firm in 2019 with 7 years of experience in marketing communications and global marketing in various industries such as FMCG, IT, Finance, Sustainable Energy, and Retail. You may contact him through christian.nacorda@firstcircle.com. To know more about First Circle and its financing services, visit www.firstcircle.ph.
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