TO keep financial technology (fintech) sector’s trajectory in the Philippines, United States-based technology firm Ripple Labs Inc. said that government should establish enabling environment through clear regulations while industry players were advised to always adapt to customer needs.
Ripple Southeast Asia Head Kelvin Lee said in an email to the BusinessMirror that regulators play a crucial role in the growth of the fintech industry, adding that the local government and Bangko Sentral ng Pilipinas (BSP) were on the right track in protecting the interest of both customers and the sector.
However, Lee said that they “should continue to establish clearer regulations that can help payments become more seamless and efficient in order to encourage consumers adoption of e-payment and cashless services.” This can, in return, contribute to Philippine economic growth, he added.
The Central Bank in 2018 released the National Retail Payment System regulatory framework to set guidelines for retail payment activities, with a goal of increasing electronic payment transactions to 20 percent and promoting financial inclusion.
The Ripple regional head added that the government and BSP should be able to strike a balance in placing regulations.
“Over-regulation may be disruptive to innovation and user adoption; under-regulation may increase risks of financial crime or compliance issues,” he said.
Lee said that Ripple is always in coordination with regulators to address regulatory concerns, conduct “sandbox” testing—or the evaluation of a software in an isolated setting—and even assist in implementing national on-demand liquidity framework.
On the part of fintech players, Lee said that they should be able to have a grasp of the products and services their customers are seeking in order to address pain points.
“In the Philippines, where many are dependent on remittances, customers need secure, low cost, streamlined experience for real-time global payments,” he said.
Ripple is optimistic that more fintech players will be entering the scene given that the country is pushing for financial inclusion.
Lee said that even banks and financial institutions were making their way toward fintech solutions to streamline banking processes.
PHL is ready
The Philippines is ready to embrace the digital platforms for banking services, Lee said, noting that the lockdown has hastened the shift to online payments and transactions. Citing a study, he said that the volume of electronic payment transactions in the Philippines rose from 1 percent in 2013 to 10 percent in 2018.
In addition, the Ripple official said that increase in online money transfers coursed through InstaPay is a signal that digital platforms are being adopted amid the “new normal.”
Philippine Payments Management Inc. recently reported that Instapay saw its transactions in April rose by by 32.18 percent to 8.86 million from 6.71 million the previous month amid mobility restriction due to the pandemic. In value, transactions reached P53 billion, averaging at P6,128 per transfer.
“We anticipate that eWallet services will become a basic offering to customers from financial payment operators in the Philippines,” Lee added.
He said that inbound volume growth from markets such as United States, United Kingdom, Middle East and Asia is anticipated.
“Since the ECQ [enhanced community quarantine] has restricted the mobility of Filipinos, electronic payments and online transactions have become safer, more convenient, and healthier options over going to a bank or lining up at an ATM [automated teller machine] to withdraw cash,” Lee said.
Image credits: Dreamstime
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