In the wake of rampant digitization initiatives, the young population of the Philippines is constantly adopting next-gen technologies and apps. United Overseas Bank clearly stated that the country’s internet penetration stood at 67% in January 2021 wherein the Filipinos on an average spent 10 hours and 56 minutes per day over the internet.
It comes as no surprise that the Covid-19 pandemic has only accelerated the adoption of digital channels in the country, causing a dramatic surge in digital payments as well.
Record spike in Fintech funding
2021 was a record-breaking year in terms of fintech funding in the Philippines. As per the data compiled by the United Overseas Bank (UOB), Philippines’ fintech firms witnessed a total funding of $342 million in the first half of 2021, more than double of what was raised in 2020 and exceeding the previous all-time high of $248 million raised in 2018.
Pandemic induced surge in digital payment
The lockdown restrictions forced majority of the consumers to switch to mobile payments and digital banking apps. As per the data from Central Bank of the Philippines (BSP), 20.1% of monthly payments volume was done digitally by the end of 2020 a 10.1% increase from 2018 where the volume was just 10%.
Further, a study by Kaspersky revealed that the Philippines tops the chart in Southeast Asia with e-wallet adoption as 37% of the local respondents acknowledged using digital methods during the pandemic.
Advent of the first digital banks
Post-issuing 6 digital banking licenses in 2021, the Philippines witnessed the launch of its first virtual-only banks. And, out of those six digital banks, three started operations in 2021 and have successfully onboarded over 120,000 deposit accounts so far.
These banks are Overseas Filipino Bank (OFBank), Tonik Bank and Maya Bank. According to Benjamin Diokno, the Governor of Bangko Sentral ng Pilipinas (BSP), “Digital banks will significantly contribute to the growth and development of the digital financial ecosystem catalyzing the achievement of the financial inclusion and digital transformation goals.”
Of late, the Philippines has welcomed various regulatory frameworks to further boost fintech. The launch of Digital Payments Transformation Roadmap 2020-2023 by the Central bank of the Philippines (BSP) aims to digitize at least 50% of the retail payments and onboard at least 70% of Filipino adults to the financial system.
Year 2021 saw quite a few regulatory introductions concerning cryptocurrency, digital assets, open banking and virtual asset service providers (VASP) on grounds of increasing popularity for digital platforms in the country.
A flourishing Fintech sector
As per several reports there are over 250 fintech companies operating in the Philippines and its fintech industry ranks third in Southeast Asia after Indonesia and Singapore.
To top it all, the Securities and Exchange Commission (SEC) of the Philippines has even launched the PhiliFintech Innovation Office (PIO), that comes under SEC’s Corporate Governance and Finance Department (CGFD), with the aim of regulating and further supporting fintech in the country.