In the Phillipines there are more mobile phones than people – a staggering statistic given that the country is experiencing one of Asia’s fastest population growth rates hitting 116.5 million people, last year.
With three-quarters of the populace seamlessly connected to the internet and an increasingly tech-savvy younger demographic there has been growing clamour for modern financial services. By 2030, its bankable population is expected to peak at 85 million people – a rise of 30%. Yet even then, this is dwarfed by the number of active cellular mobile connections today.
Carlo Brillantes, Head of Fintech at foodpanda, a popular online food and grocery delivery platform, believes that against this backdrop there is one clear path forward for the payments, banking and e-commerce landscape.
“I think in the Philippines, it will continue to be a mobile based disruption. It may be an e-wallet, possibly embedded banking. But at the end of the day, definitely in the Philippines, it will be a mobile based disruption,” he says.
“If you consider that in the Philippines, there’s around 168 million smartphones and Filipinos spend 32% of their time on their smartphones. Most likely, anything that happens down the line will have to be mobile first.”
Like many companies in the region, ‘foodpanda’ has increasingly leveraged e-commerce technologies in recent times to tap into this wave of mobile users. This included the launch of its e-wallet service ‘panda pay’, designed to encourage a quicker checkout process by enabling customers to store credits within the wallet. With pandapay users can top up any amount on the app to pay for their food or grocery orders while also gaining access to some perks like cashback or discounts on future orders.
“One of the key things we have done recently is we have simplified the payment method by using our closed-loop wallet, pandapay,” Brillantes says.
“It’s easy to put in cash, the transaction is super smooth compared to the other online channels and we totally leverage that. It is definitely something we’ve been able to grow in the last twelve months.”
Bridging the Gap Between Cash and Digital
A report by foodpanda’s Berlin-based parent company Delivery Hero on Filipinos’ payment method preferences backs up these claims. It revealed recently that only 51 percent of consumers now prefer paying with cash reflecting a split in their customer base between cashless and cash-on-delivery (COD) payments.
Of the half that prefers various digital payment methods, this includes 27 percent using a mobile wallet app, 17 percent using a debit or credit card, and the remaining four percent using other digital payment methods.
“That doesn’t mean that those 50% don’t have a wallet,” Brillantes adds. “They do, but there are certain behaviour factors in our market. Some people want to see the product delivered first before they make the payment. So that kind of is our dilemma right now. We’re going to try to bridge that and make sure we convert those people because we are sure they already have the online channels. Now its just a case of monitoring their behavior and making sure that we are able to cater to them and satisfy their needs.”
Tacking Identity
Edmon Joson, Chief Product Officer of Tonik Digital Bank, believes to move forward in the world of e-commerce there is another issue at play.
“A lot of people will say AI is the most disruptive technology to come along. But to be honest, in my corner of the world in the Philippines, identity or solutions around identity is going to be more of a disruptor or what we want as a disruptor in the industry.
“Right now, we have a lot of challenges in terms of identity. Even though the Central Bank has launched a national ID, it’s still growing, and we’re still trying to find a way to make sure that it’s integrated well into all our financial services. So it’s quite a challenge, and I think we want to have disruptors come in and address our issues on identity, first and foremost.”
He adds: “It should not only be about collaboration with the government and providing a national ID and a sort of centraliSed database for identity. But we also want technologies around protecting that identity and ensuring that customers who provide their data across different services have full control and access to that identity. Today, you can see a lot of institutions utilising identity, and not all of them have good intentions. So, it’s important to ensure that a customer has full control over their information and is able to share that information with the right people.”
Joson is well placed to observe the shift in the digital landscape, with Tonik Bank laying claim as the Phillipines’ first digital bank. In fact, it is one of only six fully licensed digital banks in operation with the central bank of the Philippines (Bangko Sentral ng Pilipinas) having closed the application window for digital bank licenses for three years, from September 2021.
Catering to Cultural Needs
While Joson is clear that technological advancements can further improve the digital banking landscape what excites him most is seeing how these can continue to address needs that are unique to the Filipino community.
“Everyone knows that Filipinos are all about family. We are one of the first banks in the Philippines where we offer an account that can be shared, not just with one person, but with groups or communities. And we call that a group stash. You can open up one in Tonik and share it with different Tonik users. You will be able to see not just the balance of that account, but even all the transactions that happen for that specific account,” he says.
“These are the kind of things that we can emulate from other advanced digital banks in the region so we can bring in technology that’s more relevant to us as a country and as a culture.”
Looking forward, Joson is optimistic that the world of banking, payments and e-commerce can best evolve, not by looking at each individual disruptor in isolation but by realising how these advancements can merge together to create something more seamless.
“Again, one of our key challenges in digital banking is identity. Making sure that whenever we onboard or have people join our bank, we’re able to establish identity. Having groups or families come together and then linking them up allows us to leverage information about each other. So, we’re not relying on one source, but multiple sources of truth.”
Reporting by Christine Lee at Seamless Asia
