Philippines fintech growth to include blockchain – AVCJ Forum

It follows a spate regulatory enforcement tightening for cryptocurrency token sales – known as ICOs – across China, Singapore, and Korea.

"There have been so many ICOs and speculative offerings, investors have to be very selective about which ICOs to participate in," Enrique Gonzalez, president and CEO of the Philippines' IP Ventures, told the AVCJ Philippines Forum. "I think regulation will eventually have to come in, in the right way. But given that it's a $150 billion industry today, the writing's on the wall – it's here to stay and it will continue growing."

Gonzalez added that cryptocurrencies and technologies known as smart money would do for cash transactions what the smart phone did for written letters. In the Philippines, this outlook was supported by expectations that the country's large remittance market would benefit from blockchain-enabled efficiencies.

The Philippines international remittance market is said to be worth about $27 billion and is expected to grow at around 3-4% a year. Meanwhile, domestic remittances amount to $20-30 billion, underpinned by migration from regional areas to the country's large cities.

Mikko Perez, founder and CEO of Manila-based fintech player Ayannah, said his company was partnering with a number of groups that use bitcoin to facilitate remittances. This effort includes services that convert payments from one fiat currency to another without using the standard international transfer system known as SWIFT.

"It's more than bitcoin that we should really look at – it's fundamentally the blockchain technology," Perez said. "We're in early days and it can be used for a lot of applications in fintech like authentication and encryption. The concept of a distributed ledger is what will be game changing in the next few years."

Deployment of blockchain technology in the Philippines' fintech ecosystem remains a nascent phenomenon. Early adopters include Coins, a US-founded blockchain and fintech company operating in the country, which received a $5 million venture round earlier this year.  

Reginaldo Cariaso, senior managing director and co-head of investment banking at BPI Capital, added that more widespread uptake of the technology would require integration into daily life.

"For bitcoin to really be pervasive in the Philippines, the ability to trade it for something tenable will be key," Cariaso said. "Until then, it will just be a speculative investment. You can probably use it for a transfer of payments, but the key will be to be able to buy something like a cup of coffee."

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