The Philippines is a country where most of its citizens still depend on cash. About three-quarters of its inhabitants were unbanked as of 2019. Yet, the winds of change are blowing from the fintech sector.
Digital wallets have gained traction in the country in recent years, supported by a younger user base that is comfortable with experimenting with new apps and web-based tools.
GCash, the mobile wallet and payment service arm of Philippine-based fintech firm Mynt, for instance, now has 33 million users on its platform. It logged a 254% year-on-year bump in transactions in 2020. The firm hit PHP 1 trillion (USD 20.8 billion) in transaction volume the same year.
“We will be using this capital to sustain the momentum in 2020 by introducing a lot of game-changing services on our app, and enhancing our tech infrastructure and talent pool,” Tek Olano, chief finance officer of Mynt, told KrASIA.
Mynt is reportedly eyeing another fundraising round to attain the ambitious USD 1 billion valuation, while other players such as Tencent-backed PayMaya, PayPal, Gojek-backed Coins.ph, and GrabPay are also competing for a slice of the country’s online payment market. However, Olano believes that GCash’s first-mover advantage has helped the firm to stay ahead of the competition.
“We are the first mobile wallet in the country to have a full suite of in-app financial services including credit, investment, insurance, and savings. Our goal is to democratize access to these products by simplifying the user experience and offering the best value in the market,” he said.
KrASIA recently spoke to Olano and Ron Testa, vice president for strategy at GCash and founding member of Mynt. The pair discussed the company’s profitability status, challenges, as well as future projects and possible IPO plans.
The following interview has been edited for brevity and clarity.
KrASIA (Kr): The recent capital injection for Mynt has brought its total valuation to almost USD 1 billion. Will Mynt consider going public?
Tek Olano (TO): The decision to go public has to be taken after considering various matters, including shareholder alignment, the market environment, and a particular purpose for listing. As management, the important thing is to increase shareholder value by continuously introducing game-changing innovations, and increasing our relevance across the underserved and unbanked markets. In doing so, we will continue to accrue value for our shareholders, whether as a private or public company.
Kr: Did GCash manage to achieve profitability in 2020? How does the firm generate its revenue?
TO: GCash generates revenues by providing our users with payment and transfer services, including purchases of telecom load, online payment, shopping through QR codes, payment of bills, and money transfers to banks. Moreover, Mynt offers financial services to its users through GCredit, GSave, GInsure, and GInvest. This enables us to create further avenues to improve revenue sources for the company. We now have multiple monetization levers that make us confident to achieve profitability in the near future.
Kr: What are the challenges that hinder the adoption of mobile payments in the Philippines?
Ron Testa (RT): Registration is the first challenge. Although regulators have already relaxed some know your customer (KYC) measures during the pandemic, and we are employing a customer identity platform to fully verify in real time, the main verification barrier is still the lack of valid government ID to prove a user’s authenticity. We welcome the government’s moves to launch the National ID System, and we are here to support the government and help expedite this if we can.
Trust is the second challenge. As an economy where cash is still king, a lot of Filipinos are still wary of the idea of storing their money in their mobile phones, especially when cases of cyber fraud go viral. This mindset continues to improve and mature as shown by our exponential growth of active users. We do our best, not just to grow our user base, but to educate them on how to keep their accounts safe.
Smartphone penetration is the third challenge. About 30% of Filipinos still don’t have smartphones and are unable to register and use all the features of GCash.
Kr: With strong contenders like Tencent-backed Paymaya, what is your take on the market competition? What makes GCash stand out?
RT: To be honest, we welcome new fintech players to this space to build trust and change the perception of cashless payments being unsafe. We are also taking a platform approach to our business model, partnering with different financial institutions, be it traditional or digital banks, or fintech firms, to offer their products on our app.
Partnering with us gives them access to over 33 million registered users. We really put a lot of effort into making sure that we gain the trust of our users and that’s what separates GCash from the other players.
Kr: Do you take inspiration from Chinese fintech companies or regional brands?
TO: With Ant Financial being our shareholder, of course, we look to emulate the success of their mobile wallet, Alipay, and their joint ventures like India’s Paytm, Indonesia’s Dana, South Korea’s Kakao Pay. Just like Alipay, we want to be a super app that provides relevant services to all users and introduces game-changing products that promote financial inclusivity. But of course, the landscape and context of China and India are different from ours. We put a lot of effort into researching how we can improve our products, messaging, and touchpoints to stay relevant to Filipinos.
Kr: What are Mynt’s plans for 2021? Is Mynt considering raising more funds this year?
RT: We shall opportunistically maintain discussions with potential investors, remaining mindful of our valuation, the strategic fit of partners with our vision, and alignment with our shareholders. It is important [to bear in mind] that potential investors come not only as financial investors, but that they also want to enhance the total value of the company through insights and synergies.
Kr: What is your outlook for the fintech scene in the Philippines in 2021?
RT: We believe that the fintech scene, especially mobile wallets, will continue to flourish in 2021, as more and more people recognize its convenience and relevance in their daily lives. We also foresee a lot more firms entering this space, whether local or foreign players, because of the increase in adoption and more progressive regulations.