The coronavirus pandemic spared no one. Aside from its impact on public health, Covid-19 forced us into a three-month lockdown, which sent the country’s economy into a free fall.
These days, only businesses deemed essential can operate at full capacity. While every type of business was affected by quarantine, small businesses had to exert more effort to survive. Since these enterprises have limited work force and tech capital, they have taken the brunt of the impact of the lockdown.
In the Philippines, it is estimated that there are about 998,342 micro, small and medium enterprises (MSMEs), which constitute about 99-percent of the total businesses in the country as of 2018. As the hundreds of millions of Filipinos are adapting to a new normal of limited mobility and physical distancing, these businesses are also forced to adjust to the demands of entrepreneurship in the time of Covid-19.
No less than Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said that financial technology should play a vital role in the new economy amid the age of coronavirus. By 2023, the BSP aims to have 50 percent of all retail transactions conducted through digital means.
Thus, since the lockdown began on March 15 this year, more and more small businesses have popped up online. With many people losing their means of income because of the requirement to stay at home, they have resorted to micro and small entrepreneurship to make ends meet. Today, the Philippines has a thriving scene for online, small businesses.
Indeed, for the economy, digital is the new normal. For small businesses who are adapting to the new ways of the economy in the middle of a pandemic, financial technology is an ally. Not only is it a way of adjusting to the new normal, it can also be deemed as an upgrade for the traditional way of doing business as well.
Mobile wallets like GCash can help small businesses in the country. As more and more small entrepreneurs move to Facebook and other online platforms to market their products and services, e-wallets can bring merchants and consumers closer together. Not only is this alternative more convenient, but it also helps the government in beating Covid-19 because digital transactions help people to stay at home in order to flatten the curve.
Going digital also helps small merchants gain customer confidence because this promotes public health through contactless transactions. Studies have found that bacteria and viruses can survive for days on the surface of a paper bill, thus increasing chances of transmission.
Fintech also makes accounting more efficient because it is easier to track digital transactions. History of cash transfers, inflow, and disbursements are easily available on their mobile phones. This also works in favor of customers who keep track of their expenses, as they do not have to worry about losing their receipts because fintech already does this for them.
Besides, money is not the only thing that small merchants can take into account. Fintech can also help small merchants develop a more effective strategy in making profit by providing rich customer insight. Their transaction logs will indicate consumer patterns so they can know which product sells most, how much more they can earn, and even the demographics of their target customers.
Long gone are the days when only the big businesses have access to heavy and enormous machines with these services. With the help of fintech, even small merchants can enjoy these benefits for less money, or better yet, for no money at all.
With fintech, even “nonessential” businesses can be at par with essential services when it comes to making profit even during lockdown. As of 2020, GCash has partnered with over 75,000 merchants nationwide, linking small businesses and customers together as they adjust to the new normal. Social sellers are also using their e-wallets to thrive.
Undoubtedly, fintech plays a big role in keeping the economy afloat as the country searches for more ways on how to revive its plunging economy in the midst of a pandemic. By providing an efficient and affordable way for small merchants to conduct business, it is only a matter of time before we can say that the Philippine economy is thriving in the new normal.
Ney Villasenor, Vice President, Corporate Affairs Group, Globe Fintech Innovations Inc.