Philippines seen as new front for war among Chinese fintech firms
MANILA, Philippines — The Philippines will likely become the latest financial technology battleground for Chinese tech players.
Last week, telecommunications giant PLDT Inc. announced it signed agreements with Shenzhen-based Tencent Holdings and global investment firm KKR for a "substantial minority stake" on its fintech unit Voyager Innovations.
The transaction, worth $175 million, "marks the largest investment to date in a Philippine technology company," PLDT said. Last year, Ant Financial Services Group —owned by Chinese tech magnate and Alibaba Group founder Jack Ma — invested in Globe Telecom-backed Mynt, a rival of Voyager.
In a note, Fitch Solutions Macro Research said competition between Ant Financial and Tencent will motivate uptake of mobile financial services in the Philippines.
But the Fitch Group unit said Tencent will likely remain a laggard in regional fintech versus its competitor Ant Financial.
“Tencent will likely resort to aggressive subscriber acquisition strategies, such as those which it already deploys in the Chinese market to gain dominance, although these promotions will continue to erode the already razor-thin margins on its transactions,” Fitch Solutions said.
“We expect Tencent to move where Ant Financial moves, although it has significant catching up to do to its rival,” it added.
Financial inclusion in the Philippines remains low, akin to other less-developed Southeast Asian nations. A study of the Bangko Sentral ng Pilipinas showed 52.8 million Filipino adults were still unbanked as of 2017 due to lack of enough funds to meet required minimum balances.
According to Fitch Solutions, the largest hurdle to mobile financial services uptake in the Philippines will be the poor service quality of mobile networks.
“We are positive of the investment in deepening penetration of digital payments in the Philippines, and the addition of a strategic and well-experienced foreign investor in Tencent will improve the quality and reach of services,” the research group said.
“Mynt and Voyager’s services are used largely outside physical points-of-sale, such as for bill payments and money remittances, which we believe is due to poor network coverage, although investments by both PLDT and Globe into improving mobile access networks will provide upside,” it added. — Ian Nicolas Cigaral
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