There's No Better Time for Fintechs to Invest in the Philippines Than Now Philippines is home to the world's most social-media-savvy population
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For the longest time, the Philippines was largely known either as a business process outsourcing hub or as a tourist destination by the international community. And it shows. In the past decade or so, the services sector has been the biggest contributor to the country's GDP.
While all these are still true to this day, the country has recently taken on a new tag: home to the world's most social-media-savvy population.
In the last four years, the country's internet users have consistently emerged as the group that spends the most time on social media worldwide. In 2018, Filipinos spent four hours and 12 minutes everyday on different social media platforms, according to a Hootsuite and We Are Social annual digital report. At least 70 per cent of the country has internet access.
These numbers would not have mattered as much a decade ago. But in this age when the world's largest companies are internet-based services, the Philippines is suddenly an important market. Just a mere look at the tech and internet companies already with local offices in the country shows the influential role the country plays in Southeast Asia.
In 2012, the Philippines was one of the first markets e-commerce pioneers Lazada and Zalora entered in Southeast Asia. Today, the two online marketplaces are in the top 10 most visited by Filipino shoppers. In 2013, Facebook granted Philippine-based users free access to the platform, the first market in Asia to be offered such service. To this day, the Philippines is one of the first markets to experience new iterations and offerings of the platform.
It helps that the country is a young market with a median age of 24 years. The middle class is rising too, as the government waived income taxes for those earning less than 250,000 Philippine peso annually. Flushed with cash, Filipinos are now equipped to spend more on goods, so much so a global study even claimed that by 2030, the country's middle class will spend more than Italy's. For some Filipinos, this means even the chance to save and invest.
No wonder then, that aside from consumer-driven businesses and startups, there's a rise in the number of fintech firms operating in the country and promising to deliver financial services to a mobile and digital savvy population who stand to benefit so much in terms of fulfilling their aspirations and improving their lot. According to an industry study conducted by the Milken Institute in the country, investments in fintech firms totaled $160 million from 2016 to 2018, which saw 44 new companies established in the country. Their offerings have ranged from mobile wallets to insurtech services, as they try to tap the 77 per cent of the country's 107-million population that remains unbanked.
Banking on Filipinos' tech-savviness, most fintech firms are pushing to be mobile-first, or at least be in the channels the market is familiar with. Some are equipping sari-sari stores with point-of-sale systems, others try to be available on Facebook and Messenger, while still others try to have a mobile app with a seamless user experience.
With that large a market, there's certainly room for fintech players to do business in the country. Even the country's industry regulator, the Bangko Sentral ng Pilipinas, is urging the fintech sector to participate in the effort to educate and enable more Filipinos to available financial services today, as it aims to double the population with formal banking accounts by 2023, from 35 per cent of the population in 2017 to 70 per cent.
Access and acquisition of such basic financial products allow vast opportunities for Filipinos to be empowered to participate in more economic activities that may help them fulfill their potentials. It could allow them to retire early by diversifying their income, or it may simply just give them a chance to have a better life as they try to gain financial stability.
With that end goal in mind, it's not only the sector that prospers but the economy as a whole in virtuous cycle of growth. And who wouldn't want to do business in a vibrant, robust market?