Sari-sari stores that offer embedded financial services will help propel the local fintech market, according to an alternative finance expert.

“That’s the beauty of embedded finance,” said Mario Jordan “Magellan” Fetalino III, head of alternative finance and innovation garage of UBX Philippines Corporation, the fintech subsidiary of UnionBank of the Philippines. “Even players like groceries are now able to [offer] additional layers of services … At some point, you will see a lot of non-financial institutions acting like banks.” 

“Many businesses in the PH do not even have a bank account. Now they are the bank,” Mr. Fetalino added. He cited individuals in rural areas cashing in overseas remittances at sari-sari stores through their mobile phones. 

Mobile connections in the Philippines were equivalent to 140% percent of the total population in January 2022, according to GSMA Intelligence. Meanwhile, the World Bank reported that 51% of Filipinos have bank accounts in 2021, up from 34% in 2017.

Embedded finance or the integration of finance into non-finance companies like sari-sari stores is one of the three fintech “megatrends” identified at a Dec. 7 event organized by TechShake Asia, along with open finance and decentralized finance. 

Open finance, a model that allows platforms to share financial data provided that there is consumer consent, will pave the way for wider integration among services. 

“Open banking is going to be inevitable in the country,” Mr. Fetalino said. “I can just plug in to the open API [application programming interface] of an app like Foodpanda and already utilize the data of their customers as long as there’s permission … the permission will come from you as a customer.” 

Decentralized finance, which allows people to exchange financial assets on the blockchain without relying on banks or brokerages, will “push the production and provision of products and services at the point of need,” said Mr. Fetalino, who added that these three megatrends will be pushed by the government’s focus on digital infrastructure. P. B. Mirasol