FROM its early beginnings of traditional brick-and-mortar transactions to the rise in automation as seen in the proliferation of automated teller machines (ATMs), the global banking industry is facing yet another new wave of innovations to make financial management faster and more efficient.
Amid the rise in global
connectivity through the Internet, financial innovations are evolving, and
financial technology—or the so-called fintech—is becoming the new mode of doing
business among banks and financial institutions all over the world.
In recent years, advanced
technology providers have diversified into the world of financial services—with
two of the largest competing technological giants, Google and Apple, now
providing digital wallet services.
Google Pay, for example, describes its electronic wallet service as “a
fast, simple way to pay on sites, in apps, and in stores using the cards saved
to your Google Account.” Google also says the service “protects your payment
info with multiple layers of security and makes it easy to send money, store
tickets, or cash in on rewards—all from one convenient place.” Apple Pay,
meanwhile, claims that its service “is even simpler than using your physical
card, and safer, too.”
Earlier this year, Facebook
announced its venture to put up “Libra,” a blockchain digital currency.
In the Philippines, fintech
has transformed the delivery of financial services—from branch banking to
online banking, paper-based money to electronic money, and face-to-face
customer verification to technology-aided know-your-customer process.
The Philippines is positioned
to make its own financial technology innovations as Internet penetration
continues to expand and the population—which is largely composed of young
adults—are now spending a lot of time online. A recent report said that
Filipinos spend an average of 10 hours a day on the Internet.
However, poor Internet
connection and infrastructure hinder technological advances in the country,
which has a great potential to take advantage of huge online business
Bangko Sentral ng Pilipinas
(BSP) Deputy Governor Chuchi Fonacier told the BusinessMirror
that good infrastructure and fast Internet connection are crucial for the
country to reach its potential when it comes to digital innovations in the
“Having a good public
infrastructure such as high-quality and affordable Internet connection for the
populace would provide a suitable environment for fintech products and services
to flourish,” Fonacier said.
Recent data, however, reveal a
bleak outlook. Despite high costs, the Philippines’ average connection speed
was only at 2.8 Megabits per second (Mbps) in 2015. This is significantly lower
than the global average connection speed of 5.1 Mbps, which makes our Internet
speed the second slowest in the Asia-Pacific region based on data from the
International Telecommunication Union.
Spur of creativity
Amid the growing pains of connectivity in the country,
the ability of Filipinos to create,
based on what they have, is astounding. The BSP said banks and financial
technology companies are increasingly finding ways to deliver new services that
only need little connectivity.
“There’s still considerable
momentum when it comes to fintech development because fintech players are able
to design products and services that can run on low Internet bandwidths,”
Fonacier told the BusinessMirror.
“This is also the case for
banks and other financial institutions, whereby the design and delivery of
products and services primarily takes into account the Internet connection and
speed for certain markets/areas,” she added.
A recent example is banking
solutions provider PearlPay’s tie-up with a rural bank in Dagupan. PearlPay
signed a pilot program agreement with BHF Rural Bank Inc. (BHF) for the use of
cloud-based technologies to deliver services to customers.
The agreement allows the bank to access cloud-based technologies such as
core banking solutions (CBS), agent banking solutions (ABS), and eWallet
solutions—all of which are designed to reach customers with limited or no
access to the Internet.
Earlier this year, Philippine-owned business group Transnational
Diversified Group (TDG) and Japanese shipping firm NYK Line have joined forces
to develop a fintech platform that will allow electronic money transfers
without an Internet connection.
The program would allow
seafarers and vessels’ masters to make electronic money transactions aboard
MarCoPay takes its name from “Maritime Community,” and seeks to provide
its target market with a quality product that can help them strategically
manage their finances. MarCoPay, the brainchild of NYK and TDG, comes in the
form of an app, which will be launched in January 2020.
MarCoPay will use QR codes
that can be used to complete pre-boarding procedures, receive and convert
salaries into digital currency, and this e-money can be used for onboard
purchases and for remitting money to their families.
The BSP said it continues to open its doors to innovations
through its fintech roadmap. “Likewise, the BSP collaborates with other
financial regulators, through the Financial Sector Forum FinTech Committee, to
ensure fintech policy consistency, prevent regulatory arbitrage and promote
expansion of fintech innovations,” Fonacier said.
“As you know, the BSP is
spearheading a number of major initiatives. All of these initiatives
necessitate a stable, reliable, affordable and high-quality Internet
connection. As such, the BSP remains committed in working with the Department
of Information and Communications Technology [DICT] to push the agenda
forward,” she added.
“The BSP understands that
the DICT is already working on the National Broadband Plan formulated in 2016,
which aims to address the longstanding issue of Internet connection quality in
the country. The plan will provide Filipinos with wider access to high-speed
Internet connection and better services, which can spur economic activity,
particularly in the e-commerce and digital space,” Fonacier said.