Douglas Gan is a serial technopreneur, investor, venture builder and a thought leader in smart city solution using blockchain technology. He currently serves as the co-founder and CEO of GBCI Ventures, a US$100M Smart City Investment Fund as well as BCB Blockchain, a technology protocol focused on the development of smart cities. Digital Asset Live Editor-in-Chief talked to Mr Douglas about the future of decentralised fintech in Asia, and specifically in the Philippines, where GBCI Venture is particularly active.
Q1: Why does your fund focuses its activities in the Asia-Pacific region?
A1: The Asia-Pacific region is one of the fastest growing places when it comes to fintech. Multiple startups focused on fintech have sprouted across the area, with China, Singapore, and Japan leading the way. Fintech has disrupted the financial sector across the world, bringing much needed innovation and change, and the Philippines looks to be a part of these changes.
Q2: Why the Philippines?
A2: The Philippines, with a population of just over 100 million people, more than half of whom own a mobile phone, can be seen as a prime real estate for fintech development. Indeed, multiple startups and fintech incubators have opened up in the country, with many focusing on payment systems and alternative finance while blockchain, cryptocurrencies and other financial services not far behind.
Government response towards the changing landscape that is fintech has been positive. In recent years, the Philippine government has enacted polices that are targeted at achieving greater financial inclusion while pushing for growth and innovation in the world of financial services.
The country’s central financial regulator even hopes to raise the adoption of digital payments systems by 20% by the year 2020. The government has also signified that it is ready to collaborate with other fintech leaders, signing an agreement with the Monetary Authority of Singapore aimed at fostering fintech cooperation. Regulatory safeguards have also been set to help address money laundering concerns and protect consumers.
Q3: Do investors feel the change?
A3: Investors both global and local have started to take notice as well. In 2017, saw an $11.2 million in investments for new fintech firms which has steadily increased, reaching $96.6 Million in 2018. Investors like Indonesian startup titan Go-Jek, Singaporean firm Grab and Hong Kong’s Oriente have made their presence known in the Philippine’s fintech sector while China’s corporate juggernauts Alibaba and Tencent have flexed their investment muscles, with the latter raising over $175 million in a funding round for the Philippine telecom’s fintech arm, Voyager.
Q4: What are the main challenges for decentralised fintech in the Phillipines?
A4: It’s not all rainbows and sunshine, however. While other countries have made inroads with fintech startups, The Philippines is still lagging badly behind. In 2018, startups in the country only received around $50 million in venture capital funding, an abysmally low amount considering investments in the region totaled $3.6 billion that year. The country has little access to venture capital, aside from angel investors.
Funding isn’t the only challenge fintech startups face in the country. Firms face an alarming lack of talent in the country as well. Startups have reported difficulty in hiring and retaining fintech talent in the country. This appears to be a common challenge across the region, as fintech startups in Indonesia, Malaysia and Thailand have also experienced the same difficulty.
The lack of infrastructure has also slowed down the fintech sector in the Philippines. Low internet penetration, abysmally bad internet connectivity speeds are also compounded by a variety of factors including geographical concerns, government inaction, corporate monopolies and most tellingly, corruption, have all conspired to leave the country with one of the worst internet services in the Asia-Pacific region.
Q5: What trends are important, in your opinion?
A5: Right now, we are seeing a remarkable growth in the Philippine fintech sector. Increased access to wireless internet via 3G and 4G networks is breaking the barriers caused by infrastructural bottlenecks, while the entry of a third major telco player has altered balance of power in the current Philippine telecoms sector.
As quoted from Atty. Edsel Tupaz, Partner of Gorriceta Africa Cauton & Saavedra Law Firm and a known advocate of fintech in the Philippines, “The government continues to support the local fintech scene with increasingly liberal policies, including testing the waters with regulatory sandboxes. These factors have attracted international Venture Capital firms, boosting access to capital that startups need. Because of these developments, the Philippines is becoming a friendlier ecosystem for businesses and capital supportive of fintech initiatives.”
Q6: How does GBCI Ventures participate in the country’s fintech sector?
A6: This stage in the development of the country’s fintech sector is when global partners, such as GBCI Ventures, become critical. Global partners bring not just much needed capital to startups, but insight on fintech trends worldwide and experience in transforming a concept into reality.
GBCI Ventures does all that and more. Aside from bringing a veritable venture capital war chest to the tune of $100 million, the firm also helps startups hit the ground running by providing business critical processes that every fintech startup needs. GBCI Ventures can also leverage their own pool of talents to help startups with developing fintech applications in the Philippines. Their focus on investments that will become critical in the fintech sector, as well as smart cities, will become crucial, especially as the country begins to develop the human capital that will become critical in the coming fintech renaissance.
As the Philippine fintech scene grows, it will need a partner that brings not only much needed capital, but the know-how and drive to innovate. GBCI Ventures and other global players can be that partner that helps bring on a digital transformation.