The rise of digital payments and alternative finance
The Central Bank of the Philippines (BSP) played a vital role in the evolution of the FinTech industry. As early as 2000, the BSP allowed banks to engage in electronic banking to improve financial access. However, since a considerable portion of the population remains unbanked, the adaption of online banking was gradual. It was only in the years leading up to the COVID-19 pandemic that most banks incorporated online banking to cater to the growing share of Filipinos owning smartphones. Through their devices, Filipinos can easily open bank accounts online and access them easily, either through mobile applications or online banking, without having to step into a bank branch. The BSP targeted to expand the number of Filipino adults with bank accounts to 70 percent by the end of 2023. The pandemic stimulated demand for online banking and digital payment since most Filipinos increased their e-commerce transactions.Among FinTech companies, GCash pioneered money remittances nationwide by turning mobile phones into an e-wallet using their app. Today, GCash is the first fintech unicorn, providing various solutions, including bill payments, QR code payments, investments, loans, and insurance services. Its biggest competitor, Maya, also gained unicorn status in the previous year and developed itself as a super app with the same services as GCash, but with a digital bank.
As of November 2022, 289 operating FinTech firms offered various digital financial solutions in the Philippines. Apart from payments and mobile wallets, there were also several startups in the cryptocurrency and alternative lending categories. Meanwhile, as remittance inflows continued to grow, digital remittance firms provided a viable option for sending and receiving money worldwide.
