It’s been a whirlwind year for the world of fintech. The post-pandemic year of challenges, setbacks, achievements, and wins have made up what the industry is seen as today – a beacon of hope and progress, built upon digital inclusion and financial empowerment for every Filipino.
Let’s look at the year that was to appreciate the progress we have made in the past, and to anticipate the greatness that is to come as we move forward.
As 2023 comes to a close, we are proud to report that we have achieved the twin targets of the Bangko Sentral ng Pilipinas (BSP)’s Digital Payments Transformation Roadmap. We have surpassed the industry goal of banking 70 percent of the adult Filipino population into the formal financial system and digitizing 50 percent of all retail payments by the end of the year.
In the Philippines, we have always struggled with a severely underserved Filipino adult population. Several geographically-disadvantaged regions, conflict areas, and low-income rural communities have little to no access to the internet, financial literacy, and even basic financial services. The BSP reported that the number of unbanked Filipino adults in 2019 was 71 percent of the total adult population.
In just two years, fintech saw a significant boom. According to a study by McKinsey, the rate of account ownership climbed exponentially to 56 percent in 2021 from just 29 percent in 2019. This means we banked over 16.9 million Filipinos. The Philippines has one of the fastest population growth rates worldwide and the bankable population is projected to rise from 65 million in 2022 to 85 million by 2030 — a 30 percent increase.
The number of digital retail payments also surged from 30.3 percent in 2021 to 42.1 percent in 2022. In fact, six out of 10 Filipinos altered their behaviors in the past three years to integrate digital services into their lives.
The Fintech Alliance.PH has proudly released the Annual Fintech Philippines Report 2023. It is a prized resource material for legislators, policy makers, academe, researchers, investors, and foreign missions in the country. It captures the evolution of the country’s fintech industry and the impact the individual and collective activities of all players have on the lives of Filipinos.
The Philippines is seeing substantial growth in banking and connectivity. From 2022, we’ve already seen a 9.2 percent increase in deposit accounts, which stands at 93.2 million, and 41 million active e-money accounts. We tap into this behavioral fact. Smartphones have penetrated 84.9 percent of the population, with 97.5 percent of them mobile broadband connection users. That’s 84.75 million internet users and counting.
Human behavior has been changing swiftly, with an increase in digitally-dependent transactions and a priority on a digital-forward way of life. Digital banks are on the rise – digital-centric apps are being used by 38 percent of the population for online payments. Twenty-one percent use them for lending, 11 percent for remittance, and nine percent for e-wallets. With these statistics, we have a better grasp of what matters to most Filipinos and their banking priorities. Listening to our audience is key in improving our services.
The fintech market is expected to grow by $44 billion by 2024. The Philippine government has been beefing up its investments into digital to transform the country into a digital hotspot. In his second State of the Nation Address, President Marcos mentioned that the digital economy generated over P2 trillion, a tenth of the country’s GDP. The fintech industry is forecast to continuously grow as the Philippines aims to be a $1 trillion economy by 2033, according to a study by S&P Global Market Intelligence.
The current administration recognizes the Philippines as an emerging hub for innovation. President Marcos has made digital infrastructure a top priority and certified key legislative bills in digitalization as ‘urgent’ to improve digital accessibility, governance, and strengthen cybersecurity. The recent enactment of the Internet Transactions Law is an additional protective layer for consumers in the digital space, in line with the thrust of fintech players to prioritize the safety and welfare of digital Filipino users.
Under the Philippine Development Plan 2023-2028, the government has achieved its fintech target, five years in advance. We now have 285 fintechs as of 2023. This feat is a testament to the collaborative efforts of stakeholders across the financial ecosystem.
In November, the Philippines stepped into the spotlight with the grand exhibit of “Bagong Pilipinas: The Philippines Country Pavilion” at the Singapore FinTech Festival (SFF), regarded as one of the world’s most influential and biggest FinTech events. We had the opportunity to demonstrate Filipino skills, talents, and ingenuity, and also highlight the country as a bright spot for digitalization and finance on the global stage. The Philippines’ participation in SFF is a relevant key step towards scaling sustainable and inclusive digital finance in the country.
We will also prioritize public-private partnerships and fruitful collaborations, formed with stakeholders of the public sector – civil society groups, grassroots organizations, and the government. We will continue to invest in digitization and better security. Digital transformation is helping traditional banks cater to the emerging younger target market by reinventing themselves and delivering the latest technology to consumers who wish to do banking with more ease, speed, and convenience.
We foresee the future of technology to include lifestyle integration, automated and intuitive interfaces, accountability and responsiveness, trust and security, proactiveness, and context and sensitivity. As we gear up to take center stage in digital transformation and innovation in 2024, we must never forget that today – and every day – is all about the empowerment of every hardworking Filipino.
We have embraced the challenge of ensuring that no Filipino is left behind in this digital revolution. In our collective march towards building a better society that promotes shared prosperity, the current statistics tell a compelling story of progress, but there is still much work left to be done.