Financial Crime World

Philippines Poised for Digital Transformation as Mobile Internet Access Booms

Manila, Philippines - The widespread adoption of mobile internet access in the Philippines is expected to drive significant growth in the country’s fintech sector, according to a new report by the Milken Institute.

Key Drivers of Digital Transformation

The report highlights three key drivers of this digital transformation:

  • Increasing Use of Social Media: With 67 million Facebook users, or 3 percent of Facebook’s global user base, the Philippines has one of the highest rates of social media usage in the world. This presents a significant opportunity for fintech companies to partner with social media giants to introduce new financial products to millions of Filipinos.
  • High Prevalence of Pre-Paid Mobile Connections: 96 percent of mobile connections are pre-paid, providing fintech companies with an alternative basis for assessing creditworthiness, even for unbanked segments of the population. This could help expand financial inclusion for individuals without a formal credit history.
  • Growing E-Commerce Market: The Philippines’ e-commerce market is expected to grow significantly over the next decade, with Google and Temasek forecasting that it will reach $9.7 billion by 2025. As more economic activity moves online, online payments will become increasingly essential to everyday activities.

Central Bank’s Stance on Fintech

The Bangko Sentral ng Pilipinas (BSP), the country’s central bank, has taken a cautiously supportive stance towards the development of the fintech sector, acknowledging both its potential benefits and risks. The BSP has sought to enable the expansion of fintech in consideration of its potential to increase efficiency and overcome traditional barriers to financial access.

Conclusion

The report concludes that the Philippines is well-positioned for a digital transformation driven by mobile internet access, social media, and e-commerce. As the country’s fintech sector continues to grow, it is likely to play a key role in expanding financial inclusion and increasing economic activity.

Sources

  • “The Unprecedented Expansion of the Global Middle Class: An Update” by Homi Kharas, Brookings Institution
  • “Digital in 2018” by We Are Social and Hootsuite
  • “The Mobile Economy: Asia Pacific 2018” by GSMA Intelligence