May 19, 2016 4:00 pm JST
Commentary
Ross O'Brien -- Philippines could be first cashless economy
Converging factors
All these converging factors -- remittances, technology-enabled services, and government policy -- are contributing to the growth of a budding financial technology applications development industry. By building on strong domestic adoption of mobile money, the government stands a good chance of creating the world's first cashless economy.
Will a Duterte administration come to appreciate the transformative power of cyber currencies, and help institutionalize the e-peso and mobile money? Given Duterte's concern for the common man, any tool the country can use to increase financial inclusion and alleviate poverty has a fair chance of receiving his blessing.
He also appears to have a penchant for technology adoption when it serves his goals. During his tenure as mayor, Davao invested millions in "smart city" information technology solutions from vendors such as IBM for public security and safety monitoring systems.
Yet Duterte's myopic focus on crime, together with his patriarchal, parochial views on traditional society, may blind him to the modern economic realities of the Philippines, potentially stunting growth in the nascent fintech sector. For example, he has indicated plans to expand a curfew on bars and karaoke clubs in Davao to the rest of the nation when he takes office, citing a need for workers to get to bed earlier.
That could do more than just dampen night life. It could also curb the all-night life that is forcibly adopted by call center operators and other knowledge workers whose work schedule is geared to the business hours of U.S.-based clients. Knowledge economy social theorists such as the U.S. commentator Richard Florida reckon that vibrant entertainment districts are essential components of successful urban creative clusters.
The very nature of digital money could also prove problematic for the new president. The growing facility with which the Philippines' banking system has dealt with digital money creates risks that the country could turn into a cybercrime hub. In February, Filipino banks were used as the transfer point for dispersing $81 million siphoned from the Bangladesh central bank in a cyberattack.
Duterte, who staked his mayoral reputation on transforming Davao from a crime haven to a safe, business-friendly city, may not look kindly on digital currencies if he sees them as a boon to money launderers and other criminals.
In the end, however, it is more likely that populist pragmatism will win out. Duterte's vulgarity and macho rhetoric often elicit comparisons to Donald Trump, but the similarities largely stop there. Unlike Trump, Duterte is a political veteran who works within a democratic system that rewards larger-than-life characters for promising out-of-the-box change -- and very quickly expels them if they fail to deliver.
Duterte's successes in Davao, however brutishly achieved, were nevertheless informed by the demands of his working-class constituency. Digital money has proven essential to chipping away at poverty in the Philippines, and has the potential to accelerate innovation and entrepreneurialism in knowledge intensive industries that add hundreds of thousands of new jobs annually.
A long-standing populist operative such as Duterte should be able to see how important the e-peso and the fintech industry are to his ability to advance the hopes and dreams of his country's citizens.
Ross
O'Brien is a technology analyst and managing director of the Hong Kong
office of Intercedent, an investment and business advisory.
All these converging factors -- remittances, technology-enabled services, and government policy -- are contributing to the growth of a budding financial technology applications development industry. By building on strong domestic adoption of mobile money, the government stands a good chance of creating the world's first cashless economy.
Will a Duterte administration come to appreciate the transformative power of cyber currencies, and help institutionalize the e-peso and mobile money? Given Duterte's concern for the common man, any tool the country can use to increase financial inclusion and alleviate poverty has a fair chance of receiving his blessing.
He also appears to have a penchant for technology adoption when it serves his goals. During his tenure as mayor, Davao invested millions in "smart city" information technology solutions from vendors such as IBM for public security and safety monitoring systems.
Yet Duterte's myopic focus on crime, together with his patriarchal, parochial views on traditional society, may blind him to the modern economic realities of the Philippines, potentially stunting growth in the nascent fintech sector. For example, he has indicated plans to expand a curfew on bars and karaoke clubs in Davao to the rest of the nation when he takes office, citing a need for workers to get to bed earlier.
That could do more than just dampen night life. It could also curb the all-night life that is forcibly adopted by call center operators and other knowledge workers whose work schedule is geared to the business hours of U.S.-based clients. Knowledge economy social theorists such as the U.S. commentator Richard Florida reckon that vibrant entertainment districts are essential components of successful urban creative clusters.
The very nature of digital money could also prove problematic for the new president. The growing facility with which the Philippines' banking system has dealt with digital money creates risks that the country could turn into a cybercrime hub. In February, Filipino banks were used as the transfer point for dispersing $81 million siphoned from the Bangladesh central bank in a cyberattack.
Duterte, who staked his mayoral reputation on transforming Davao from a crime haven to a safe, business-friendly city, may not look kindly on digital currencies if he sees them as a boon to money launderers and other criminals.
In the end, however, it is more likely that populist pragmatism will win out. Duterte's vulgarity and macho rhetoric often elicit comparisons to Donald Trump, but the similarities largely stop there. Unlike Trump, Duterte is a political veteran who works within a democratic system that rewards larger-than-life characters for promising out-of-the-box change -- and very quickly expels them if they fail to deliver.
Duterte's successes in Davao, however brutishly achieved, were nevertheless informed by the demands of his working-class constituency. Digital money has proven essential to chipping away at poverty in the Philippines, and has the potential to accelerate innovation and entrepreneurialism in knowledge intensive industries that add hundreds of thousands of new jobs annually.
A long-standing populist operative such as Duterte should be able to see how important the e-peso and the fintech industry are to his ability to advance the hopes and dreams of his country's citizens.
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