Payment, FinTech, InsureTech & +ve Finclusion need by each ASEAN Market - The Philippines.

In this next series of articles for ASEAN, we will go into each market and answer 4 key questions to get insights into how a market is positioned for payments today and what the next big things are in FinTech & InsureTech.

So lets get going with The Philippines, Mabuhay!

Maaaring mas detalyado ito kaysa sa ibang mga merkado.... ito ang tahanan! :-)

1. What is the best Payment app in The Philippines

2. What is the next big thing in FinTech in The Philippines

3. What is the next big thing for InsureTech in The Philippines

4. What does The Philippines market need to improve Financial Inclusion and foster Wealth growth.

Exec Summary

• Best Payment App: The best payment app in the Philippines is likely GCash, due to its dominant market share (70% of digital transactions), extensive user base (94 million registered users), and wide range of services, including payments, transfers, investments, and insurance. Other notable apps like Maya, ShopeePay, DiskarTech, and PayMongo are strong contenders, but GCash’s interoperability, merchant acceptance, and comprehensive ecosystem make it the top choice.

• Next Big Thing in FinTech: The next big thing in the Philippines’ FinTech sector is tokenized financial assets and open banking, driven by initiatives like PHPX (a peso-backed stablecoin) and the BSP’s Open Finance Framework. These innovations, supported by AI-driven credit scoring and digital lending, aim to enhance financial inclusion, streamline remittances, and empower the unbanked through secure, accessible platforms. 16%of Filipinos hold a Crypto wallet so DeFi & Web3 should find an easy foothold and a regulator who is progressive versus others in the ASEAN block.

• Next Big Thing in InsureTech: The next big thing in the Philippines’ InsureTech sector is embedded micro-insurance integrated into super apps and e-wallets like GCash and Maya. These solutions, leveraging AI for personalized offerings and claims processing, target the unbanked and underinsured, aligning with the BSP’s financial inclusion goals and the country’s growing digital economy.

• Needs for Financial Inclusion and Wealth Growth: The Philippines needs enhanced digital infrastructure, increased financial literacy, interoperable payment systems, and affordable financial products like micro-loans and micro-insurance to improve financial inclusion. For wealth growth, fostering SME financing, digital investment platforms, and regulatory reforms to curb predatory lending are essential. Addressing National ID role out speed for eKYC, trust, cybersecurity, and rural connectivity gaps will ensure sustainable progress for the >30% unbanked population.

The answers for the curious cats and data dawgs.........

Best Payment App in The Philippines Market

The best payment app in the Philippines is likely GCash, due to its dominant market share (70% of digital transactions), extensive user base (94 million registered users), and wide range of services, including payments, transfers, investments, and insurance. Other notable apps like Maya, ShopeePay, DiskarTech, and PayMongo are strong contenders, but GCash’s interoperability, merchant acceptance, and comprehensive ecosystem make it the top choice.

• GCash: Operated by Mynt (a Globe Telecom venture), GCash is the leading mobile wallet in the Philippines, with 94 million registered users as of 2023 and handling 70% of digital transactions. It supports bill payments, money transfers, QR code payments, remittances, micro-loans, investments (e.g., GInvest), and insurance (e.g., GInsure). Its integration with over 63,000 merchants, global partners like Alipay, and features like GSave (savings) and GCredit (loans) make it versatile for both banked and unbanked users. GCash’s dominance is bolstered by its user-friendly interface and widespread adoption across urban and rural areas.

• Maya: Formerly PayMaya, Maya Bank is a BSP-licensed digital bank with a robust e-wallet offering payments, savings, loans, and crypto trading. It serves 8.7 million depositors across six digital banks and is popular for its seamless interface and focus on financial inclusion. Maya is gaining traction but trails GCash in user base and merchant reach.

• ShopeePay: Integrated with Shopee’s e-commerce platform, ShopeePay excels in online shopping and instant payments, eliminating the need for direct bank integrations. It’s popular among younger users but is less versatile than GCash for non-e-commerce transactions. Its strength lies in cost-efficient payment infrastructure for merchants.

• DiskarTech: Launched by Rizal Commercial Banking Corporation (RCBC), DiskarTech is the Philippines’ first Taglish (Tagalog-English) super app, designed for micro, small, and medium enterprises (MSMEs) and unbanked users. It offers savings, transfers, bill payments, and micro-insurance with a focus on accessibility, but its market share is smaller than GCash or Maya.

• PayMongo: Launched in 2019, PayMongo provides an online payments API for businesses, supporting credit/debit cards, e-wallets, and bank transfers. It’s ideal for SMEs but less focused on individual consumer use compared to GCash or Maya.

Critical Perspective: GCash’s market dominance is driven by its early entry, telecom backing, and comprehensive services, making it the go-to for both urban and rural users. However, its reliance on mobile internet (despite 67% internet penetration) can limit access in remote areas with poor connectivity. Maya’s digital banking features are competitive, but its smaller user base and merchant network lag behind GCash. ShopeePay’s e-commerce focus limits its versatility, while DiskarTech’s niche appeal to MSMEs and Taglish interface is innovative but not yet scalable. PayMongo serves businesses well but isn’t a consumer-facing leader. Trust issues and digital literacy remain barriers for all apps, particularly among the 30% unbanked population.

Next Big Thing in FinTech in The Philippines

The next big thing in the Philippines’ FinTech sector is tokenized financial assets and open banking, driven by initiatives like PHPX (a peso-backed stablecoin) and the BSP’s Open Finance Framework. These innovations, supported by AI-driven credit scoring and digital lending, aim to enhance financial inclusion, streamline remittances, and empower the unbanked through secure, accessible platforms.

Detailed Analysis:

• Tokenized Financial Assets: The launch of PHPX, the first bank-collateralized Philippine Peso stablecoin by JUST Finance, marks a significant milestone. PHPX enhances remittance efficiency (critical for $40 billion in overseas Filipino worker remittances in 2024) and enables access to tokenized investments like bonds and ETFs. Blockchain-backed solutions, led by players like RCBC, reduce foreign exchange costs and improve portfolio diversification. The BSP’s collaboration with the SEC to regulate digital assets further supports this trend, despite delays due to global crypto uncertainties (e.g., FTX collapse).

• Open Banking and API Integration: The BSP’s Open Finance Framework (Circular No. 1153, 2022) encourages account aggregation, payment initiation, and credit scoring within a regulatory sandbox. This fosters competition, improves product offerings, and enhances access for the unbanked. APIs enable seamless integration between fintechs (e.g., PayMongo) and banks, driving embedded finance in super apps like Shopee.

• AI-Driven Digital Lending: Firms like Tonik, Salmon, and CIMB Bank use AI and alternative data (e.g., mobile usage, online behavior) for credit scoring, offering loans to the unbanked and SMEs. Digital lending, comprising 20% of fintech activity, is a key growth area, with platforms like Acudeen and First Circle addressing SME cash flow challenges. However, cybersecurity risks and rural infrastructure gaps pose challenges.

• Cross-Border Payments and E-Wallets: Enhanced e-wallet interoperability (e.g., GCash with Alipay) and real-time payment systems like InstaPay support cross-border transactions. These systems cater to the Philippines’ large remittance market and growing e-commerce sector ($15 billion projected for 2025).

Critical Perspective: Tokenized assets like PHPX are transformative for remittances and investments, but regulatory clarity is needed to build trust, especially post-FTX. Open banking promotes inclusion but requires robust cybersecurity to prevent fraud, a growing concern with rising digital adoption. AI-driven lending is promising but risks exacerbating debt if not paired with financial literacy, given reports of predatory microfinance practices in the region. Rural connectivity (only 67% internet penetration) limits scalability, and the BSP’s cap on new digital bank licenses until 2024 may slow competition.

Next Big Thing in InsureTech in The Philippines

The next big thing in the Philippines’ InsureTech sector is embedded micro-insurance integrated into super apps and e-wallets like GCash and Maya. These solutions, leveraging AI for personalized offerings and claims processing, target the unbanked and underinsured, aligning with the BSP’s financial inclusion goals and the country’s growing digital economy.

Detailed Analysis:

• Embedded Micro-Insurance: InsureTech is growing steadily, with 3% of fintech activity focused on insurance. Platforms like GCash (via GInsure) and Maya offer micro-insurance products (e.g., health, accident, crop insurance) embedded in their apps, making premiums affordable (as low as $0.20/month) and accessible via e-wallets. These products target the 70% unbanked and underinsured, leveraging super apps’ high penetration (70% of Filipinos use apps with built-in finance).

• AI-Driven Personalization and Claims: AI and machine learning enable tailored insurance products using alternative data (e.g., mobile usage patterns) and automate claims processing, reducing costs and improving access. This is critical in a market where traditional insurance penetration is low due to cost and trust barriers.

• Partnerships with Fintechs and Banks: Collaborations between insurers, fintechs (e.g., Cashalo), and banks (e.g., RCBC) facilitate scalable distribution. For example, Home Credit’s QR-enabled credit card integrates insurance options, enhancing accessibility. Partnerships with rural banks further extend reach to remote areas.

• Regulatory Support: The BSP’s Regulatory Sandbox Framework and Insurance Commission’s push for digitalization encourage InsureTech innovation. The focus on financial inclusion aligns with offering low-cost, accessible insurance to MSMEs and low-income households.

Critical Perspective: Embedded micro-insurance is ideal for the Philippines’ sachet economy, where small, affordable products resonate. However, low financial literacy and trust in digital platforms (only 9% used internet for financial transactions in 2019) limit adoption. AI-driven solutions require stable internet, which is inconsistent in rural areas. The nascent InsureTech sector (3% of fintech) faces competition from dominant lending and payment segments, and regulatory oversight must balance innovation with consumer protection to prevent mis-selling

What The Philippines Needs to Improve Financial Inclusion and Net Wealth Growth

Overview: The Philippines needs enhanced digital infrastructure, increased financial literacy, interoperable payment systems, and affordable financial products like micro-loans and micro-insurance to improve financial inclusion. For wealth growth, fostering SME financing, digital investment platforms, and regulatory reforms to curb predatory lending are essential. Addressing trust, cybersecurity, and rural connectivity gaps will ensure sustainable progress for the 30% unbanked population.

Detailed Analysis:

For Financial Inclusion:

• Strengthen Digital Infrastructure: With 67% internet penetration and 30 million smartphone users, the Philippines has a strong digital foundation, but rural connectivity lags. Investments in fiber internet and mobile networks (e.g., BSP’s coin deposit machines in Metro Manila) are critical to extend services like GCash and Maya to remote areas.

• Promote Financial Literacy: Lack of awareness and trust (45% of unbanked cite statutory balance myths, 40% lack documentation) hinders adoption. Programs like DiskarTech’s Taglish interface and BSP’s financial education initiatives must scale to boost confidence, especially among the 70% unbanked.

• Interoperable Payment Systems: The BSP’s real-time payment systems (InstaPay, PESONet) and standardized QR networks enhance e-wallet interoperability (e.g., GCash, ShopeePay). Expanding these systems to rural areas and integrating with ASEAN cross-border networks will improve access.

• Affordable Financial Products: Micro-loans (e.g., Tonik, Salmon) and micro-insurance (e.g., GInsure) target the unbanked and MSMEs. Partnerships with rural banks (e.g., UnionBank with Fexco, FinScore) and fintechs like 1Sari Financing Corporation extend reach to marginalized communities.

• Regulatory Support: The BSP’s Digital Payments Transformation Roadmap (50% digital transactions achieved by 2023) and Regulatory Sandbox Framework foster innovation. The Philippine Identification System (PhilSys) simplifies KYC, aiding onboarding for the unbanked.

For Wealth Growth:

• SME Financing: SMEs drive economic growth, but strict traditional lending criteria limit access. Fintechs like Acudeen, First Circle, and SeekCap (affiliated with UnionBank) use AI for credit scoring, easing cash flow for SMEs. Digital banks like Maya and Tonik offer loans from $20 to $50,000, fostering entrepreneurship.

• Digital Investment Platforms: Tokenized assets (e.g., PHPX) and wealthtech platforms (3% of fintech) enable retail investors to access bonds, ETFs, and crypto. Platforms like Investagrams and Abra democratize investing, but regulatory clarity is needed post-FTX.

• Curb Predatory Lending: High microfinance fees and aggressive collection practices drain household wealth. The BSP and SEC must enforce regulations to protect borrowers, ensuring fintech loans are transparent and affordable.

• Public-Private Partnerships: Collaborations between the BSP, Fintech Alliance PH, and global players (e.g., Alibaba Cloud, Mastercard) drive innovation. Initiatives like UnionDigital Bank’s e-wallet for unbanked Filipinos and RCBC’s blockchain projects enhance inclusion and wealth creation.

• Skill Development: Building fintech and data analytics skills through programs like the CamTech Summit or partnerships with universities (e.g., UP Law Center) will attract investment and support a tech-savvy workforce.

Challenges to Address:

• Digital Divide: Rural areas lack reliable internet and electricity, limiting fintech access.

• Cybersecurity Risks: Rising digital adoption increases fraud risks (e.g., deepfakes), requiring robust safeguards.

• Trust and Literacy: Low awareness and trust in digital platforms (only 12% used mobiles for transactions in 2019) hinder adoption.

• Microfinance Debt: Predatory practices in microfinance threaten financial stability, necessitating stricter regulations.

• Regulatory Balance: The BSP’s cap on digital bank licenses until 2024 may limit competition, while delayed crypto regulations slow tokenized asset adoption.

Critical Perspective: The Philippines’ fintech growth (42.1% digital payments, 65.6% account ownership in 2022) is impressive, but the 30% unbanked population and rural infrastructure gaps pose challenges. Predatory lending and cybersecurity risks threaten inclusion gains, and wealth growth requires addressing systemic issues like low savings rates and documentation barriers. The BSP’s proactive policies are a strength, but execution and rural outreach are critical.Overview: The Philippines needs enhanced digital infrastructure, increased financial literacy, interoperable payment systems, and affordable financial products like micro-loans and micro-insurance to improve financial inclusion. For wealth growth, fostering SME financing, digital investment platforms, and regulatory reforms to curb predatory lending are essential. Addressing trust, cybersecurity, and rural connectivity gaps will ensure sustainable progress for the 30% unbanked population.