Global Tech

Tech Innovation Takes Root in the Philippines

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(Photo courtesy Tigercub Digital)

Companies developing tech-based solutions for consumers in emerging markets see great opportunities in the Philippines today. A growing number of innovative visionaries view the country as a testing ground for products and services with potential for global scale. More are likely on their way.

This may come as a surprise to those who think of the Philippines as a tech laggard. Although the country’s tech and startup ecosystems are growing, skeptics often point to the limited post-seed funding, unfavorable business regulations, and other challenges that await would-be innovators. Because of these challenges, the country came in at 90th place on the 2013 Global Innovation Index, a study by Cornell University, INSEAD, and WIPO that ranked 142 countries on their innovative capacity.

The Philippine economy’s problems  are common ones in emerging markets. Widespread poverty, underdeveloped financial services, corruption in the public sector, and poor infrastructure, among other drawbacks, prevent the country from realizing its full potential. Other emerging market countries like Nigeria and Mexico have the same issues. Yet several qualities make the country particularly attractive in comparison to its peers.

One of those qualities is a cultural affinity for digital engagement. According to Perfect Digital Storm: Philippines, a recent market study that I co-authored with a digital strategy firm in Manila, Filipinos show some of the world’s highest levels of online brand engagement, growth in internet penetration, social media account usage, and other indicators of digital uptake. These trends cut across income levels and make the Philippines a promising market for tech companies of all types.

Another major benefit is the Philippines’ large English-speaking population. Along with Tagalog, English is the country’s official national language. Widespread English fluency reduces the localization challenges that global tech companies face there. It also gives Filipino entrepreneurs the English skills necessary to communicate with the international business community.

These factors and others help explain why Internet.org, a global partnership dedicated to improving Internet access worldwide, chose the Philippines for one of its pilot projects last year. The organization worked with Globe, a leading Filipino telecom, to provide free Facebook access to customers without mobile broadband contracts. Through innovative product plans, the telecom found ways to expand customer loyalty while giving millions of people access to the web for the first time.

Like its main competitor Smart Communications, Globe also offers innovative mobile money products that bring convenience and financial opportunity to its customers. These products, which allow people to store and transfer money on their mobile devices, offer particularly life-changing capabilities for the rural poor, many of whom lack access to financial services. They are specially designed for the inexpensive, basic devices that constitute the bulk of most phones in the country.

The Philippines’ mobile payments market remains undeveloped relative to its potential, but some organizations are working to change that. USAID funds a project called Scalable Innovations in Mobile Money, which provides training and services to facilitate adoption. Other NGOs, as well as members of the Filipino diaspora, used mobile payments to distribute relief aid to the victims of Typhoon Yolanda, one of the world’s most serious  disasters 2013.

Many private companies also are innovating in mobile payments and commerce. One of these companies is Zap, a retail loyalty program that allows Filipino shoppers to get discounts, accumulate points and obtain rewards with an account tied to their mobile phone number or an NFC-enabled “smart sticker” that can be affixed to the back of a device. By designing the service in this way, Zap can serve many market segments, including the millions of Filipino shoppers who don’t have smartphones.

Another local innovator is Ayannah, a digital commerce and payments company focused on the unbanked in emerging markets. The company offers a wide range of services that facilitate financial inclusion for the base of the pyramid. One of its products, for example, allows migrant workers to send specific-purpose remittances to unbanked beneficiaries in the form of mobile airtime credits, gift certificates, and other electronic cash equivalents. Ayannah CEO Mikko Perez says that the service has already achieved success in the Philippines and now plans to expand it internationally.

Lenddo, a New York financial services startup that uses social media activity to assess creditworthiness of loan recipients in emerging markets, has also found inspiration in the Philippines. According to Lenddo co-founder Richard Eldridge, who is based in Manila, the company got its start there, and while it has since expanded to Mexico and Colombia, the Philippines remains its biggest market, with over 300,000 users today.

Groundbreaking mobile data offerings, payments services, disaster aid distribution systems, and credit scoring technologies are just a few innovations taking root in the Philippines today. Others are likely around the corner as a new generation of entrepreneurs and companies takes notice of the opportunity.

Will Greene is a writer and strategy consultant focused on Asia’s emerging R&D ecosystems. You can find him on LinkedIn.

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