Philip­pines - a fer­tile ground for blockchain & crypto cur­rency

There are sev­eral fac­tors that spur the growth of fin­techs in the Philip­pines spread of in­ter­net and smart­phones, large un­banked pop­u­la­tion and trust in tech­nol­ogy, for ex­am­ple:

Banking Frontiers - - Country Report - Mo­[email protected]­ingfron­

The Philip­pines has a large and rapidly grow­ing pop­u­la­tion of in­ter­net and smart­phone users, which has in fact fa­cil­i­tated the growth of the fin­tech sec­tor in the coun­try. Be­sides, a ma­jor­ity of the Filipinos con­sider the ad­van­tages of tech­nol­ogy as a provider of op­por­tu­ni­ties far out­weigh is­sues re­lat­ing to se­cu­rity threats and frauds. This com­pares with the fact that only 31% of the pop­u­la­tion had bank ac­counts and Filipinos in gen­eral pre­fer to ap­proach pri­vate lenders rather than banks for their fi­nan­cial needs. This trust­ing at­ti­tude to­wards tech­nol­ogy and the low pen­e­tra­tion of bank­ing ser­vices nat­u­rally pro­vide a fil­lip for the fin­tech en­ter­prises.

The Philip­pines has a ma­jor share of its pop­u­la­tion work­ing over­seas - an es­ti­mated 10.2 mil­lion - and as much as $ 31.1 bil­lion came as cash in­ward re­mit­tances to the coun­try, in ad­di­tion to $3 bil­lion in wire trans­fers in 2017. And among the res­i­dent cit­i­zens, more than half live in ru­ral ar­eas and with­out any form of bank­ing ser­vices. It is in this sce­nario that ser­vices such as mo­bile pay­ments and money trans­fers be­came the sim­ple al­ter­na­tive so­lu­tions.


The cen­tral bank of the coun­try, the Bangko Sen­tral ng Pilip­inas (BSP) has been very re­spon­sive to in­no­va­tions and has been en­cour­ag­ing the de­vel­op­ment of au­to­mated re­mit­tance ser­vices, vir­tual cur­ren­cies and other fin­tech ser­vices. While one has to ac­quire an ad­di­tional li­cense from BSP while reg­is­ter­ing a fin­tech com­pany in the Philip­pines, the li­cense al­lows the en­tre­pre­neur to op­er­ate as a fi­nan­cial in­sti­tu­tion, non-fi­nan­cial in­sti­tu­tion or a lend­ing com­pany.

One of the re­cent ini­tia­tives of BSP is the set­ting up of a blockchain and fin­tech unit to mon­i­tor the new emerg­ing in­dus­try in the coun­try. Ac­cord­ing to BSP Gover­nor Nestor Espe­nilla Jr, the unit, called Fi­nan­cial Tech­nol­ogy Sub-Sec­tor (FTSS), will con­duct ef­fec­tive over­sight of fin­tech and other in­no­va­tive al­ter­na­tives. FTSS will have two di­vi­sions - a Pay­ment Sys­tem Over­sight Depart­ment and Core In­for­ma­tion Tech­nol­ogy Spe­cial­ist Group.


The Philip­pines is in­creas­ingly be­com­ing a top cen­ter in the world for blockchain and cryp­tocur­rency projects. The main sup­port is from the reg­u­la­tors, who are open to adop­tion of these tech­nolo­gies and BSP and the Se­cu­ri­ties and Ex­change Com­mis­sion (SEC) are work­ing to­wards reg­u­lat­ing cryp­tocur­ren­cies.

At a con­ven­tion of bankers in Manila re­cently, Espe­nilla said reg­u­la­tory poli­cies and stan­dards must evolve along­side emerg­ing tech­nolo­gies and the dig­i­tal trans­for­ma­tion of the bank­ing sys­tem. He said BSP es­pouses a flex­i­ble ‘test-an­dlearn’ ap­proach to fi­nan­cial in­no­va­tion and the cen­tral bank would set up a ‘reg­u­la­tory sand­box’, to pro­vide a test­ing ground for new busi­ness mod­els to guide the reg­u­la­tors, in as­sess­ing po­ten­tial risks. This ap­proach en­cour­ages di­a­logue and multi-stake­holder col­lab­o­ra­tion among fin­techs and var­i­ous fi­nan­cial sec­tor play­ers. The pur­pose is to achieve a ‘whole-of-gov­ern­ment ap­proach’ to en­sure pol­icy con­sis­tency and pre­vent reg­u­la­tory ar­bi­trage.

With this sup­port and the keen re­sponse from en­trepreneurs, fin­tech com­pa­nies are ex­pected to have a 16.4% an­nual growth rate and by 2022, it is ex­pected to reach a half-tril­lion peso mark.


Some of the in­stances of bank-fin­tech col­lab­o­ra­tion are:

The Bank of the Philip­pines Is­lands (BPI) will open up its fa­cil­i­ties not only to fin­techs for ap­pli­ca­tions such as loan orig­i­na­tion, mort­gage find­ers, etc., but to eCom­merce providers. The bank has de­vel­oped in col­lab­o­ra­tion with a fin­tech com­pany the iPoS with In­ter­ac­tive Client As­sis­tance and Re­quire­ments eSub­mis­sion, or iCARE, which is an in­ter­ac­tive iPad ap­pli­ca­tion to

help in af­ter-sales ser­vic­ing. BDO Uni­bank has part­nered with Japan-based Seven Bank to make it eas­ier for Filipinos in Japan to re­mit money us­ing a mo­bile app. Seven Bank spe­cial­izes in ATM ser­vices.

Unionbank of the Philip­pines is mak­ing use of blockchain to en­gage more cus­tomers to get their in­puts on the ‘Ark’, which is the first dig­i­tal bank branch in the coun­try. Unionbank is col­lab­o­rat­ing with part­ners to make Ark a great bank­ing ex­pe­ri­ence both for clients and non-clients.

Philip­pine Sav­ings Bank (PSBank) has de­vel­oped card­less with­drawal fa­cil­ity with the help of a fin­tech, called PayMe, which has apart from card­less with­drawal ca­pa­bil­ity, also al­lows cus­tomers to re­quest and col­lect funds from other PSBank mo­bile app users real-time.

Rizal Com­mer­cial Bank­ing Corp (RCBC) launched the first mo­bile ATM in the Philip­pines called Cash Ex­press that en­ables its cus­tomers to do var­i­ous reg­u­lar bank­ing trans­ac­tions even through mini re­tail stores or sari-sari stores.


The Philip­pines is also ex­tremely en­thu­si­as­tic about cryp­tocur­rency and there are num­ber of fin­techs that are purely en­gaged in de­vel­op­ing tech­nol­ogy to power this mode of pay­ment. There is a plan to cre­ate a ‘Crypto Val­ley of Asia’ in the Ca­gayan Spe­cial Eco­nomic Zone, which is ex­pected to serve as a hub for both cryp­tocur­rency and fin­tech com­pa­nies. The ini­tia­tive is spear­headed by the Ca­gayan Spe­cial Eco­nomic Zone Au­thor­ity in col­lab­o­ra­tion with North­ern Star Gam­ing and Re­sorts and it is ex­pected to have some 25 crypto and fin­tech com­pa­nies lo­cated there.


While the fin­tech sec­tor is still nascent in the coun­try, some of the coun­try’s lead­ing banks have taken no­tice and have opted to be­come col­lab­o­ra­tors. wel­come it as a col­lab­o­ra­tor in­stead of com­peti­tor. Ac­cord­ing to Mon Joc­son, ex­ec­u­tive vice pres­i­dent and head for En­ter­prise Seg­ment Group of the Bank of the Philip­pine Is­lands (BPI), dis­ag­gre­ga­tion and the re-bundling of tra­di­tional bank pro­cesses are made pos­si­ble by tech­nol­ogy, and for ex­am­ple, KYC func­tions from loan orig­i­na­tion al­low a bank to part­ner with fin­tech to ad­dress a wider mar­ket. Fin­techs have sub­stan­tial scope in ar­eas like de­vel­op­ing APIs and mo­bile bank­ing apps. Sim­i­larly, the coun­try has a na­tional re­tail pay­ment sys­tem that opens a bank’s pay­ment in­ter­faces, which in turn is driv­ing the growth of fin­techs in the Philip­pines.

BPI plans to be an ac­tive par­tic­i­pant in this ecosys­tem and open up its fa­cil­i­ties to fin­techs for ap­pli­ca­tions such as loan orig­i­na­tion and mort­gage find­ers.

The BSP is pur­su­ing a dig­i­tal rev­o­lu­tion in the bank­ing sys­tem in the coun­try. It is closely mon­i­tor­ing var­i­ous plat­forms that op­er­ate in ar­eas like cryp­tocur­ren­cies, peerto-peer lend­ing and crowd­fund­ing and has is­sued gen­eral guide­lines gov­ern­ing dig­i­tal cur­rency ex­changes. At the same time, it has taken care not to in­ter­vene in the rou­tine func­tion­ing of the fi­nan­cial ser­vices sec­tor, es­pe­cially fin­tech in­no­va­tions. The coun­try has one sin­gle chal­lenge - poor dig­i­tal as well as phys­i­cal in­fra­struc­ture. How­ever, the gov­ern­ment’s ‘Build, Build, Build’ pro­gram of­fers a glim­mer of hope.

Ca­gayan Spe­cial Eco­nomic Zone is out to cre­ate a Crypto Val­ley of Asia in the Philip­pines

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