Onward and upward

February 5, 2025 | 12:00am

2024 marked a year of firsts and monumental achievements, propelling the Philippines toward becoming a leading fintech hub with advances in sustainable financial inclusion, technology and groundbreaking collaborations.

We are stepping into 2025 with clear hindsight, a stronger determination and a sharp eye for trends that will further shape the fintech industry.

However, it is always vital first to look back on our hits and misses to learn, adapt accordingly and improve. This is the key to success. Let’s reminisce on some of the most memorable milestones that defined the year and will continue to influence the years ahead.

The rise of digital-only banks has been one of the standout success stories of the past year. With the Bangko Sentral ng Pilipinas (BSP) lifting its moratorium on establishing new digital banks, the market saw new players that intensified competition. This surge and the rise of digital banking and fintech catapulted account ownership to over 70 percent of Filipino adults and boosted digital payments to 53 percent of retail transactions, up from a measly 10 percent in 2018.

Digital-only banks are transforming customer experiences while unlocking the potential for increased profitability. By prioritizing streamlined operations, these banks can maintain low operational costs while providing innovative solutions to underserved communities.

We also witnessed the strength of public-private collaborations – initiatives spearheaded by the Fintech Alliance.Ph, in partnership with the BSP and key industry players, have created a dynamic and robust ecosystem for financial innovation.

I still vividly remember being challenged by the late BSP Deputy Governor, then Governor Nestor Espenilla Jr. in 2016 to organize the emerging fintech industry while building the National Retail Payments System, which gave rise to InstaPay and PESONet. This pivotal moment set the foundation for our journey. Since its founding in 2017 with only seven corporate members, Fintech Alliance.ph has grown to over 100 organizations, driving more than 95 percent of the country’s retail digital financial transactions.

Fintech Alliance.Ph’s collaborative model spurred the creation of the Asia Fintech Alliance, a regional platform promoting fintech growth, financial inclusion and alignment with global standards. The Alliance has inspired cross-border collaboration across Asia by uniting efforts in regulation, consumer protection and financial literacy.

Another milestone moment was the Philippines’ participation in the Singapore Fintech Festival (SFF) 2024. At the Bagong Pilipinas: The Philippines Country Pavilion, Her Majesty Queen Máxima of the Netherlands, as the UN Secretary-General’s Special Advocate for Inclusive Finance, praised the Philippines’ fintech progress. She cited the country as a global example of leveraging technology for meaningful financial inclusion. She urged fintech associations worldwide to adopt financial health metrics, inspired by the Philippines’ comprehensive study on its financial inclusion initiatives.

Sustainability also took center stage, with RCBC leading the movement as the first Philippine bank to commit to zero coal by 2031. In line with promoting sustainable consumer choices, RCBC has become a preferred financing provider for Tesla in the Philippines, offering digital auto loan applications to make electric vehicles more accessible to Filipino drivers. With increasing pressure to align with global climate goals, financial institutions are expected to introduce more green finance products and sustainable investment options for a shift toward environmentally conscious banking. Sustainability will still be a top fintech priority in 2025.

Customer obsession and hyper-personalization were also all the rage and will remain key drivers. As customer expectations evolve, so will the need for delightful banking experiences. Innovations like RCBC’s Pulz app, powered by AI and data analytics, already enhance customer satisfaction and efficiency. Expect this trend to accelerate further, with banks investing heavily in understanding and anticipating customer needs at an individual level.

As we look to the future, the emergence of quantum computing holds transformative potential. The sooner we assess and address these considerations, the better prepared we will be. Quantum computing represents a paradigm shift in how information is encoded and processed, significantly improving speed and capacity. Tasks that would take contemporary supercomputers decades can be accomplished in seconds with quantum technology.

AI will also continue to drive fraud detection, credit scoring, and customer service innovations. These technologies demonstrate their potential to make financial services more secure, efficient, and accessible – trends that will gain further traction this year and beyond.

For businesses, the message is clear: thriving in this future requires embracing AI, GenAI and quantum computing today. The race for innovation isn’t optional; it’s survival. You must deliver delightful, intelligent and adaptive customer experiences to win.

This year, we also welcome the dawn of a new era: the arrival of Generation Beta. Born between 2025 and 2039, Gen Beta will be the children of younger millennials and older Gen Z. These digital natives will grow up expecting seamless, AI-driven digital experiences – and by the time they come of age, they’ll make up over 80 percent of our customer base. The future of banking is indeed digital, intelligent and limitless.

The Philippines’ fintech story manifests the power of innovation and collaboration in building a more inclusive future. More than just technology, fintech is about people coming together, driving progress, and shaping a financial ecosystem that works for all. As we set our goals for the year, let us always remember that the true essence of innovation lies in its ability to fulfill human needs – timeless in relevance, yet boundless in impact.

The past year has proven that the country is not just keeping pace with global fintech advancements. It is carving its path forward. With a strong foundation already in place, the challenge is to sustain this momentum and push the industry to greater heights.

The trajectory of Philippine fintech remains clear: ever onward and upward. By continuing to innovate, collaborate and prioritize sustainable financial inclusion, we can ensure that fintech serves the people, fuels economic growth and creates a future where financial empowerment is within reach for all.

Lito Villanueva is the Philippines’ leading and award-winning thought leader in inclusive digital finance. As EVP and Chief Innovation and Inclusion Officer at RCBC, he has led several digital initiatives at scale. He is also the founding chairman of Fintech Alliance PH, overseeing 95 percent of the nation’s digital retail financial transactions. He is the first global chairman of the South Africa-based Alliance of Digital Finance Associations, a co-founder of the Asia FinTech Alliance, and a permanent council member of the Asia FinTech Forum. He has substantially impacted the fintech landscape in the Philippines through his leadership and innovative efforts. His contributions have been crucial in advancing the fintech ecosystem in the Philippines, making financial services more inclusive and efficient.