Go-Jek Acquires Philippine FinTech Company Coins.ph

Indonesian transportation and logistics startup giant Go-Jek bought US$72 million majority stake in Philippine FinTech company Coins.ph, the biggest in Go-Jek’s record, and a sign of its interest in the emerging Filipino digital market.

Go-Jek is not the only one chasing the Philippines’ FinTech market. The Indonesian startup is, in fact, a laggard and was beaten by the bigger transport companies like Grab and Oriente who already have captured the Filipino digital payments market.

Several Philippines startups have been getting the attention of international investors in the past few years. Chinese e-commerce leader Alibaba invested in Mynt, a FinTech venture by Globe Telecom, the largest telecom operator in the Philippines. While Voyager, the FinTech arm of Globe Telecom’s rival, PLDT, acquired over US$175 million of funding in a round led by the Chinese MNC Tencent.

The Philippines have always been behind the neighboring countries in the digital startup race.

The Philippines ranked fifth in the region in terms of gross domestic product.

Its population size is second only to Indonesia with around 107 million. The country has been a major player in Southeast Asia.

The nation has made very slow progress compared to neighbors that have nurtured high-tech unicorns. We are still to see a breakthrough startup emerge from the archipelago.

The country also received only a small part of funding compared to other ASEAN countries in 2018. Only around US$50 million arrived in the Philippines as Venture Capital funding of the US$3.16 billion that flowed into the coffers of Southeast Asian startups in the first eight months of 2018.

By most accounts, it is the insufficient infrastructure that has to be blamed. Terrible internet connectivity hinders the growth of most local startups.

There are no readymade solutions to some of these problems. For example, with an archipelago of over 7,000 islands, getting wired broadband access across the country is an enormous task for service providers.

Even on slow steps, progress has been made in areas like wireless networks and 4G connectivity. Filipinos have access to high-speed internet with each passing month and year.  

Why 2019 is defining the “year of FinTech”

Around 133 startups have invaded into the Filipino FinTech scene since 2010. The domestic FinTech market is maturing, with diversity spread across four verticals such as digital payments, consumer lending, SME finance, and remittances as we enter 2019.

All the factors required were already in place, much like the rest of the Southeast Asian Countries It is not “if the FinTech transformation would ever gather rapidity,” but we should ask “when?” is it for the Philippines.

The infrastructural snag in the past may have impeded growth, but with increasing access to wireless 3G and 4G networks among the market, it is no longer the case. Several local startups have bloomed with the help of domestic capital and partnerships with bigger startups from neighboring countries like Indonesia and Singapore.

The burst of high-profile investments and the advent of international venture capitals and regional unicorns are attestation that the Philippine FinTech sector is approaching maturity.

Philippine FinTech rests on solid foundations with a positive and supportive regulatory authority. With immeasurable swathes of the population still poised to enter the digital sphere, the possibility for growth is rising. There are still challenges that remain, like the lack of digital education, the waning state of the traditional banking sector, and the laggard of infrastructural maturity.

None of this is relentless enough to create an existential risk to the Philippine FinTech sector. The nation is still opening its arms and there is still far too much room for growth, and sustained demand to keep things growing fast.

With no doubt, the FinTech sector in the Philippines is in the early stage of a new golden age.

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