Photo by Alecs Ongcal/Rappler
While being interviewed by Presidential Adviser on Entrepreneurship Joey Concepcion in Manila on Wednesday, October 25, Ma recounted how Alibaba's Alipay service, now the world's largest payment platform, was born out of a similar situation in his native China.
"We don't have a vast credit card system in China. In the last 15 years, people kept criticizing us, saying, 'How can you make people [pay] for things online? You don't have enough checks, credit cards, or banks. How would it work?'" he recounted.
"It's because we didn't have all of these that we ended up making the most advanced digital payments ecosystem in the world," he added.
It's that experience that leads the Chinese tycoon to believe the Philippines could follow and even improve upon the example Alibaba set 15 years ago by leveraging on the growing ubiquity of mobile commerce. (READ: Jack Ma: Alibaba to keep investing in PH)
Financial inclusion and fintech in the Philippines
The state of financial inclusion in the country is rather tenuous at the moment with only around 63.8% the country’s cities and municipalities supporting a banking presence based on the Bangko Sentral ng Pilipinas’ 2016 Financial Inclusive Initiative Report.
Furthermore, research done in 2017 by credit card firm VISA showed that only 9% of personal consumption expenditure in the country is done using a credit or debit card compared to neighbors Singapore at 50%, Malaysia at 30% and Thailand at 17%.
It is through these adverse conditions wherein the Alibaba founder sees an opportunity.
"The Philippines has the opportunity to develop the best fintech services in the world because you have so many mobile phones. You have 7,000 islands and it's impossible for banks to have branches everywhere, but mobile phone coverage is everywhere," Ma explained.
"The Philippines should be a cashless society. When it goes cashless, you also eliminate corruption," he added.
Players are also beginning to gradually fill the gap through fintech services which leverage mobiles phones and the Internet to provide services similar to traditional bank accounts.
They are led by the two telcos who both offer digital payment platforms, Globe Telecom through CCash and PLDT incorporated through Paymaya.
Beyond them, other startups have also entered the space including coins.ph, Pawnhero, First Circle, Salarium, Ayannah, Coins.ph and Cropital.