WHILE many see financial technology (fintech) companies as major disruptors, Bank of the Philippine Island (BPI) president Cezar Consing sees things under the current Philippine financial setting otherwise.
In a roundtable discussion with local reporters, Consing said fintech firms that have operated in the country have focused on the “unregulated” portions of banking, which cover payments and remittances.
“Fintech plays a big role in China, in the West, but not yet so much in the Philippines…My own theory is that access to banking’s basic service is still quite low, so people still want to open a bank account first, the basics,” the official said, referring to the low bank penetration. Eighty-six percent of Filipino households remain unbanked or have no deposits in the bank according to the Bangko Sentral ng Pilipinas (BSP).
To date, some of the top fintech companies in the Philippines are mobile commerce and payment services Ayannah, online payment solution PayMaya, financial comparison site MoneyMax.ph, loan portal LoanSolutions.ph, and bills payment, remittances, and mobile top-ups service Coins.ph.
Globally, investments in financial technology ventures have tripled to $12.21 billion in 2014, “signifying that the digital revolution has arrived in the financial services sector,” a report from Accenture said.
“It is still unclear whether this presents more of a challenge or an opportunity for industry incumbents, but established financial services players are starting to take bold steps to engage with emerging innovations,” it added.
In New York City, the biggest share of fintech investment deals was from lending companies or 47 percent of all deal values and 21 percent of the number of deals, the report said.
For Consing, fintech in the Philippines will catch up with the rapid developments in the West eventually.
But for now, the biggest challenge that banks face are the low interest rates, which have dampened the banks’ earnings. “This meant that net interest margin of banks have come down, and so to make the same amount of money, banks have to lend more and more,” the banker said.
BPI’s assets as of the second quarter, ending June 30, stood at P1.43 trillion, or lower from the P1.45 trillion registered in the first quarter, data from the BSP shows.
Early this year, Finance Undersecretary Gil Beltran said the country may continue to experience low interest rate environments in 2017 because of strong economic fundamentals that would offset US interest rate hikes.