Philippines’ biggest lender BDO Unibank seeks slice of mobile payments boom

BDO Unibank launched its BDO Pay mobile wallet in the Philippines this year. (Source photos by Reuters)

The Philippines’ largest bank is seeking a slice of the country’s flourishing mobile payments business in a move that would increase competition in a field dominated by fintech apps backed by giants such as China’s Ant Group and KKR.

BDO Unibank early this year launched BDO Pay, a mobile wallet for bills, merchant payments and money transfers. The service is currently available only to BDO account holders. However, the bank says on its website it is “working on making BDO Pay available [also to] non-account holders.”

BDO, which had 18.6 million customers in 2020, already has a digital banking app. Its venture into the mobile wallet business highlights how traditional lenders are pushing further into digital services amid a growing threat from fintech challengers.

Mobile wallet adoption and digital payments surged last year in the Philippines, where about 70% of the people do not have bank accounts, as lengthy lockdowns forced millions of consumers and thousands of businesses to go digital.

BDO did not respond to questions about BDO Pay, but analysts said the bank’s leading position and size would help it compete against leading fintech players GCash, which is backed by Philippines’ Globe Telecom and Ant Group, and Paymaya, whose funders include local leading telecom PLDT, KKR and China’s Tencent Holdings.

“We think that BDO has the capacity to maneuver in this frontier, supported by its sophisticated digital infrastructure that comes along with the bank’s sheer size and scale,” said Justin Tembrevilla, equity research head at Unicapital Securities.

BDO, the largest lender by assets, is a unit of the country’s most valuable conglomerate SM Investments, which is itself controlled by the Sy family, the wealthiest in the Philippines. SM’s retail arm is the nation’s largest with over 3,000 multi-format outlets — from specialty stores to supermarkets. SM’s shopping mall network is the country’s most extensive and hosts thousands more merchants.

BDO can leverage this network, Tembrevilla said, adding that “BDO can also perform cross-selling of BDO Pay services to its clients, thus offering ease of access.”

Last year’s performance of leading mobile wallets suggests a huge opportunity. GCash handled 1 trillion pesos ($20 billion) worth of transactions, while registered users hit 33 million. Paymaya handled 700 billion pesos, with accounts reaching 28 million. They aim to double the value of transactions this year and recently raised $175 million and $167 million in fresh capital, respectively, to bankroll their digital offensives.

BDO’s mobile wallet appears to complement existing services. Allowing non-account holders to use BDO Pay service could be a way for the bank to bring in new customers, said AP Securities senior analyst Rachelle Cruz. “It’s really more of complimentary service for their present clients and to hopefully get a larger share of the pie in the future.”

As the recession weakens growth in bank loans, a successful mobile payments business could boost business. “One of the avenues to grow the bottom line is to look into services where they can charge fees,” Cruz said.

But the analyst notes that there are challenges. “The management recognizes that there is growth in [the mobile payment] segment, but in terms of monetizing … we know that GCash and Paymaya have yet to really monetize the client base they have right now,” Cruz said.

The article was first published on Nikkei Asia

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.