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Financial technology firms to help boost small businesses’ reach, competitiveness

Financial technology firms to help boost small businesses’ reach, competitiveness

SMALL BUSINESSES should take advantage of financial technology (fintech) to boost their operations and become more competitive, experts said at an online forum.

Going online and adopting digital payments will give small firms in the country a chance to reach more potential customers, improve their operations and boost sales, Mitch Padua, chief product officer of mobile wallet firm PayMaya Philippines, said at a BusinessWorld Insights forum on Wednesday.

“Using digital payment solutions increases business efficiency, improve your overall business operations, even your reconciliation, gives you better insights on your customer and about your business as well. It also legitimizes your business if you’re able to accept all types of payments,” Mr. Padua said.

Robertson Chiang, chief operating officer and chief technology officer at Dragonpay Corp., said fintech allows businesses of various sizes to go online and compete, unlike before the pandemic when only firms that can afford mall spaces could reach customers easily.

“Going online is a big equalizer because you cannot really distinguish between a small seller and a big seller based on their website,” he said.

As the coronavirus pandemic prompted a shift to online payments, Mr. Chiang said transactions using mobile wallets surged to make up 64% of total transactions last year from its 21% share in 2019.

This made e-wallets the dominant payment method to date, he said, replacing cash which had a 67% share in total payments in 2019 but declined to just 24% in 2020.

In the first half, e-wallet transactions made up 71% of the total transaction volume, followed by cash (21%) and online banking (7%), he added.

“The trend [of going digital] seems to be continuing… Assuming the second half of the year will be about the same as the first half, then we’re looking at almost double again of our transactions in 2020,” Mr. Chiang said.

GCash Chief Commercial Officer Frederic Levy said they expect the volume of transactions via their mobile wallet to more than double this year to over P2 trillion from P1 trillion in 2020.

“That gives an idea on how things get faster and how Filipinos start to have a very clear picture of the advantage of this new type of financial journey,” Mr. Levy said.

Even after the pandemic, he said majority of Filipino consumers will likely continue using at least one digital payment platform.

“The consumer is now going in that direction so I think it’s getting more and more obvious in any form of business from small ones to big ones, that they need to have this digital payment [option available] to consumers,” he added.

Aside from electronic payment solutions, fintech can also offer digital lending schemes to micro-, small- and medium-sized enterprises (MSMEs) in need of working capital, said Shailendra Soni, ICT and fintech head at research and consulting firm Frost & Sullivan.

“One study showed how getting a loan at the right time can propel the growth in MSMEs — around 2-2.5 times of growth in 5-7 years. That’s how significant it is. The [key] now is having the right network, reaching out to the right kind of people with the right technology, which MSMEs will likely embrace,” he said.

While the future for digital payments in the country looks bright, Mr. Soni said the Philippines still has to improve its peer-to-peer lending (P2P) schemes to catch up with its Southeast Asian peers and give businesses more financing options.

For instance, he said it takes around five days for local banks and P2P companies to extend a loan, while this can be done within 24 hours in Singapore.

In entering partnerships, Mr. Padua said businesses should look at a fintech solution that can service both online and offline payment methods and cover all types of payment options.

“The other thing is competitive rates, because at the end of the day, each partner, each payment solution will have different rates and someone that can help you blend all of those partner payment types into one simple rate for you will make your life easier,” he said.

“Cash is still strong, not sure that cash is still king, but more and more Filipinos are getting used to digitalize their transactions in any form and have access to deeper financial journey,” GCash’s Mr. Levy said. “What we learned from the pandemic is that a lot of Filipinos were totally excluded from the financial journey and it shows how important for them to have access and for us companies to provide them some solution.” — Beatrice M. Laforga

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