BANKS are not losing significant business volumes to financial technology (fintech) players just yet as the latter remain largely focused on payments rather than loans, the central bank said, but conventional lenders are well-advised to seek opportunities in this emergent field of business.
Bangko Sentral ng Pilipinas (BSP) Deputy Governor Chuchi G. Fonacier said that fintech firms are far from boxing out brick-and-mortar banks in providing financial services to Filipinos, as most still offer a limited array of services.
“Based on the fintech map for the Philippines, payments still dominated the fintech landscape with 44% of players offering innovative solutions to facilitate payment and settlement transactions,” Ms. Fonacier said in a recent e-mail interview.
Latest data from the BSP’s Core Information Technology Specialized Group showed that 16 of 60 identified fintech providers in the country still maintain ties with banks and other supervised financial firms in carrying out their business.
“Hence, there is much room for local lenders to seize the opportunities available in the fintech space,” Ms. Fonacier said.
The central bank has been keeping up with non-bank financial developments and even organized a new office to oversee fintech operations. Most banks have embraced digital solutions by partnering with fintech companies, which are often technology firms that provide the new platforms for e-payments.
The BSP is setting sights on raising the share of e-payments to 20% of total transactions by the year 2020, from just one percent back in 2013. Digitizing payments and remittances would be crucial to achieving financial inclusion, as such a move would improve access while trimming transaction costs, monetary authorities have said.
“Given this development, banks are not expected to only maintain their traditional brick-and-mortar stronghold of the market and be complacent, they need to be agile and proactive to keep pace with ongoing sophistication of the domestic financial services industry,” Ms. Fonacier added in her e-mail.
Results of the maiden Banking Sector Outlook Survey released in October showed that 71% of lenders said they will use technology-enabled solutions in order to help broaden their client base and sustain business growth.
According to the survey, 84.2% of universal and commercial banks as well as 92.9% of their thrift bank subsidiaries said they are using or will be using digital channels for financial transactions over the next two years. — Melissa Luz T. Lopez