Digital lifestyle helping boost financial inclusion

Digital lifestyle helping boost financial inclusion

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The digital financial services sphere in the Philippines is in a “breakout stage,” with consumers slowly embracing new technologies for banking and finance, thereby promoting financial inclusion across all sectors in the country.

Given this, the two largest telecommunications companies battle for supremacy in the arena and have launched initiatives that aim to provide mobile banking services for Filipinos.

John M. Rubio, chief executive at Mynt, says the shift to the digital lifestyle presents a unique opportunity to boost financial inclusion in the Philippines with the use of
mobile technology.

Rubio, the former president of a microfinance company, explained that three out of four Filipinos aged 15 and above do not have a bank account. Also, 40 percent of municipalities are without physical access to a bank, while 95 percent do not have credit cards, “which means most Filipinos don’t have credit history on which future financial transactions will be based.”

This, in turn, leads to poor access to legitimate credit facilities and proliferation of informal lenders, who charge a monthly interest payment of 20 percent, or from 350 percent to 400 percent annually.

“This situation presents a unique opportunity to address these gaps using mobile and digital technology. For example, it provides platforms where customers can access consumer loans in a nontraditional manner, and where they can do things, like remittance, in a more efficient manner,” Rubio said.

Taking advantage of such opportunity, Mynt is pioneering initiatives of providing financial services that previously were not available to most Filipinos.

Mynt, a fully owned subsidiary of Globe Telecom Inc., aims to build a unified Globe Financial Services structure. Through Mynt, Globe hopes to enable all aspects of the Filipino’s digital lifestyle. Specifically, Mynt is looking into payments, remittance, lending, business solutions
and international platform.

“To help our nation move forward, there is a need to promote social inclusion through rapid adoption of financial technology,” Rubio said.

According to the Bangko Sentral ng Pilipinas, the lack of funds and access to it are among the gaps that contribute to the still large number of uncarded and unbanked Filipinos. In fact, the average length of time to reach the nearest bank and automated teller machine (ATM) are 26 minutes and 22 minutes, respectively. It also costs an average of P52 and P47, respectively, for a two-way trip to the nearest bank and ATM.

World Bank data showed that only 31 percent of Filipinos have bank accounts and only 18 percent of all adults in the poorest 40 percent of households in the Philippines are banked. The report classifies financial inclusion as “having an account that allows adults to store money and make and receive electronic payments.” The World Bank report also noted that innovations in technology can make financial service,s such as credit and e-payments more accessible to a larger population, increase efficiencies  and reduce costs.

Smart Communications Inc. has, so far, led the war in the digital financial services arena with the launch of PayMaya via Voyager
Innovations Inc.

Introduced in  August, PayMaya is the first of its kind, all-in-one digital payments mobile app that can be used for online shopping, peer-to-peer transfers and telco airtime reloading. It also comes with a physical PayMaya Visa Card that can be used for any face-to-face transaction with any merchant accepting Visa, as well as ATM withdrawals.

To get a PayMaya virtual account, users just need to download the mobile app through their smartphones.

Upon registration, the mobile app automatically generates a reloadable unique 16-digit instant virtual Visa card for the user that can be funded through any reloading station. This can be immediately used for online purchases in any merchant worldwide that accepts Visa.

Because the virtual Visa card number is automatically tied to the user’s mobile number, the user only needs to remember his mobile number when making transactions.

Since it is mobile app-based, PayMaya can be used by anyone regardless of the telco provider. A bank account is also not necessary. Filipinos can use their PayMaya to shop online, book flights, get travel deals, order food online and purchase digital products, such as mobile apps, games, movies, eBooks and music.

As an added perk, PayMaya users can also get 5-percent discount on all call and text loads from Smart if they purchase using PayMaya.

PayMaya users who upgrade their accounts can also transfer money to other verified PayMaya users via the mobile app.

Since it is an all-in-one product, users who upgrade their accounts can also request in-app a physical PayMaya Visa Card that can be linked to their virtual account. Once the required information is submitted through the mobile app, users are instantly notified and can complete their verification at an approved verification center—such as a Smart Jump Store—and pick up their physical card. The physical PayMaya Visa Card can be swiped for purchases in any store that accepts Visa worldwide. They can also withdraw PayMaya funds from Bancnet ATMs using their physical PayMaya card.

Train commuters can also get a physical PayMaya Visa Card with beep at activation booths in railway stations. The physical card with beep gives commuters access to the same advantages of online and face-to-face payments, but can also be used to pay seamlessly for train fares.

“The Philippine digital financial services arena is in a breakout stage right now. More people are using smartphones and accessing the Internet through apps and mobile sites. While only four out of 10 Filipinos are banked according to Bangko Sentral ng Pilipinas data, consumers are now actually more ready for e-payments and other digital financial services,” Voyager Innovations President
Orlando B. Vea said.

In  its 2015 Digital Money Report, Citi and the Imperial College London ranked the Philippines as 42nd out of 90 countries in the Digital Money Index, classifying it as “in transition” to the penultimate phase before being “materially ready” and ahead of the “incipient” and “emerging” stages.

Countries that fall under the “in transition” and “materially ready” categories are are characterized by “increasing consumer propensity to adopt digital money solutions and continued evolution of industry-specific use-cases.”