A bank launched recently by the government to cater to the needs of an estimated 10 million overseas-based Filipinos is the ideal vehicle for the Philippines to “leapfrog” to the digital economy, according to Finance Secretary Carlos Dominguez III.
Dominguez said leapfrogging or advancing significantly in the digital economy could be done in the Philippines because it has not yet fully embraced computer technologies, unlike in other countries that have already invested heavily in software and hardware that are now fast becoming obsolete.
The Overseas Filipino Bank (OFB), which was launched last January by President Duterte, could be the starting point for the country’s jump into the data-based economy, so that instead of setting up physical branches across the globe, the Bank could just rely on digital technology applications to serve as many overseas-based Filipinos as possible, Dominguez said.
Ten million overseas Filipino workers (OFWs) could be the initial beneficiaries of this technological leapfrog that would radically transform the way Filipinos buy, receive and sell and distribute goods and services.
Dominguez said this was one of the main points that stood out when a Philippine delegation led by him took part in the three-day New Economy workshop organized by the Alibaba Business School of technology entrepreneur Jack Ma in Hangzhou, China last Jan. 31 to Feb. 2.
The workshop, the first overseas government training program hosted by Alibaba, was organized following Ma’s invitation last year for Dominguez and other Philippine officials to learn more about his company’s digital infrastructure for e-commerce.
“Among the takeaways we had as a group there was that the Philippines has the opportunity of leapfrogging a lot of (digital) applications because we are not too much computerized yet, unlike other countries that have hard investments in hardware which is fast becoming obsolete but they still hang on to them because they invested so much money in them,” Dominguez told reporters.
The finance chief said that to leapfrog to the digital economy, the first concern that should be addressed is to ease financial regulations that stymie the growth of electronic commerce in the country.
“We asked (Bangko Sentral ng Pilipinas) Deputy Governor (Maria Almasara) Cyd Amador to better check all the regulations in the central bank, and everything that chokes this kind of business to take these out,” Dominguez said.
The government and the private sector also need to invest heavily in improving the country’s digital infrastructure, which is why President Duterte wants to level the playing field and speed up the entry of a third player in the telecommunications sector, Dominguez said.
Dominguez also mentioned the need to put in place a national ID system and the ability to manage large amounts of data, as among the other key factors necessary for the country’s hoped-for leapfrog to the digital economy.
The OFB, Dominguez said, could be transformed into a virtual bank where bank tellers and managers would be replaced by information technology (IT) experts who have the knowledge to manage large amounts of data and operate the OFB using cutting-edge technologies.
“A bank can be operated without any branches. You just operate it through your smart phones. You can open an account for 10 million OFWs without them having to go to a branch and opening one up,” Dominguez said, citing the groundbreaking Alipay system pioneered by Alibaba as an example of how this could be done.
Dominguez said he learned from the Hangzhou workshop that Alipay, an electronic payment system operated by Alibaba’s related company Ant Financial, has over 500 million users and over 200 million account holders with combined deposits of $250 billion and yet zero physical branches.
“We have already have a good size of potential OFWs abroad and that’s already 10 million, Land Bank has five million account holders, so why can’t we deal with them through smartphones?” Dominguez said.
During one of the lectures at the New Economy workshop in Hangzhou, Dominguez has broached the possibility of tapping Alibaba’s fintech (financial technology) solutions through Ant Financial to lower remittance costs for the Philippines’ over 10 million OFWs and offer them other online-based banking and financial management services.
Dominguez said Ant Financial’s low-cost mobile payment technology that has helped China attain financial inclusion for its small home-based enterprises can be tapped to help OFWs send money back home and prudently manage their finances via the OFB system.
The OFB was launched last month by President Duterte–in keeping with his 2016 campaign promise–to cater to the financial needs not only of OFWs but of other foreign-based Filipinos as well.
“We are excited to partner with you. Together we can launch a variety of services for the OFWs,” said Jing during the open forum following his lecture on how Ant Financial had used digital technology to help bring China’s small businesses into the financial mainstream.