By Bernie Cahiles-Magkilat
Lately, so many financial technology firms have come to this developing economy mouthing the most abused mantra: Financial inclusion.
But Fexco, one of the world’s leading fintech providers based in Ireland, was here earlier with not much fanfare only to do its share based on what the market needs and within the capacity of the country.
Ann Chan-Foley, Fexco Philippines chairperson, a Filipina who conceptualized the business from inception, was responsible for bringing Fexco to the Philippines.
Her personal experience in her homeland and in her adoptive Dublin residence inspired her to convince one of the world’s leading fintech providers to invest and develop the technology for the Philippines.
Ann, a graduate of business economics at the Pamantasan ng Lungsod ng Maynila and an MBA from Ateneo De Manila University, got married to an Irishman while working with a Philippine telco company. As she joined her husband in Dublin and living in an area 3.5 hours away from the main city center, Ann was amazed at the convenience provided by technology in a developed economy.
Ann, then working with Volkswagen in Dublin, was amazed at her new environment.
“One of the things that inspired me is the difference financial inclusion brings. It is the feeling that I have to drive 3.5 hours to the city and yet I’ve never felt more secure, we don’t even carry cash just a card and a wallet. The sense of security is very different and with the right technology we can achieve that,” says Ann.
She thought there must be some applications for the Irish fintech solutions back in the developing Philippines where access to cash is difficult even for those ATM cardholders. Her idea revolved around providing an alternative form of ATMs where Filipinos in far -flung areas can still withdraw cash without spending money and time to reach to the nearest bank or an ATM.
Her husband, who was already working with Fexco at that time, encouraged her to present her idea to his company. Fexco was founded in 1981 focusing on retail forex currency and value-added services. But the company continually evolved that in 1986, they were already present in 29 countries with 42 partners. It is one of the world’s leading independent fintech providers.
“I guess my experience inspired me to look into the solution,” says Ann. Fexco also warmed up to the idea of coming up with a fintech solution for the Philippines.
She left Ireland in 2011 to do some research in the Philippines because they don’t want to launch a fintech solution only to be met by regulatory roadblocks.
Fortunately, there was none. The Bangko Sentral ng Pilipinas was also starting to advocate for financial inclusion and was looking at solutions.
Since fintech was just starting in the Philippines, Fexco had to manage expectations. Their solution must be realistic to be able to cater to the current needs of Filipinos and the limited infrastructure of the country.
Research showed the Philippines is a cash-based society. There were 58 million ATM cardholders and credit cards issued in the Philippines. But there were only 20,000 ATMs installed in the country. Still, 34 percent of municipalities do not have banking presence and 7 percent have no access to financial points or no remittance points.
“This huge disparity between ATMs as against the issued ATM cards and credit cards presents an opportunity,” says Ann. This means, Fexco has to come up with a solution focusing on that disparity.
So, they’ve decided to provide solutions that should augment the presence of ATMs to enable people to withdraw cash. Fexco had to focus on this aspect of providing cash to Filipinos especially in remote areas where people still have to travel far and spend money to go to the nearest ATM or bank.
EASY DEBIT SOLUTIONS
With the technology solution on hand, the Irish company established its local subsidiary Fexco Philippines, which launched Easy Debit Solutions in 2017 with Ann as the CEO.
Basically, the Easy Debit Solutions serves as a micro ATM solution using ATM/debit card at any accredited local merchants instead of having to travel to the nearest ATM or bank. Easy Debit saves customers time and money while providing more secure access to cash.
It helps augment the presence of ATMs in the country. The solution uses a pin entry device paired with android phone to make a withdrawal.
For businesses, Easy Debit allows merchants to offer cash withdrawal. Fexco merchants include payment and remittance centers, retailers such as convenience stores, rural banks and cooperatives, pawnshops, and sari-sari stores.
To become an Easy Debit Solutions merchant, one is required to present a mayor’s permit, and a barangay ID or clearance. Merchants just have to shell out a one-time fee of P11,500 for the device and marketing collaterals to start the Easy Debit Solutions business. Given the limited Internet connectivity in the provinces, the device can work on a 2G or 2-bar phone signal.
“The merchant becomes the teller, you just have to present the ATM card and the merchant processes that cash withdrawal through our solution,” says Ann.
The return to merchant is also attractive because the fee to the merchant is market dictated. Normally, a merchant would base his fee from the amount a cardholder would spend to go to the nearest ATM. For its part, Fexco collects P25 per transaction. Easy Debit Solutions is bank agnostic, meaning it can process cash withdrawals of any ATM card.
“So, Easy Debit Solutions becomes a complementary solution because at the end of the day cash is still king in the Philippines,” says Ann.
“We’re growing 200 percent year on year in terms of transactions,” says Ann. They have also processed a total of P2.5 billion in transactions since it started operation in 2017.
Currently, the Easy Debit Solutions is only for cash withdrawal but Ann said they are also planning of launching other functionalities. They are already in the pilot stage for payment functionality to support the central bank’s drive to achieve 20 percent cashless transaction by next year.
But for now, ATM cash withdrawal is what they think is the most critical among ATM cardholders. Filipinos still have a long way to go for cashless or purely digital transaction because of the challenges in infrastructure and internet connectivity.
Besides, there are still lots of organizations that are still trying to migrate the manual payroll to ATM-based payroll.
“So, this is the first step, which is basically opening of a bank account and have the ATM card. On our side, we would like to focus on this basic requirement before going into the other functionalities,” she adds.
“We believe we have a good technology but we have to focus on the basics first before we become a cashless society because I don’t think we can do that straight away. Take it one step at a time. We have to make people become more confident first before we go digital. At least the physical card is one way of providing confidence that one can keep money safely,” she adds.
“But we do intend to strengthen our reach and capabilities and that will depend on the market.”
Already, Fexco has aggressive plan of ramping up the number of merchants to 5,000 next year from the current 1,200.
So far, 88 percent of its 1,200 merchants are sari-sari stores, pawnshops and remittance centers. They were able to achieve this with little marketing and promotional efforts.
“We are not competing against ATMs, but supplementing their role,” says Ann noting that ATMs run 24 hours but the Easy Debit Solutions has limitation in terms of amount the merchant can afford. It is also expensive to put up an ATM, which costs P500,000 compared to P11,500 for the Easy Debit device.
Easy Debit Solutions merchants are also benefiting. “We have seen a merchant’s small sari-sari store turning into what is now like a small convenience store generating P60,000 revenues on top of the sales she generates from the store traffic the cash withdrawal transactions create,” says Ann.
One sari-sari store merchant in Muntinlupa experienced a sharp spike in a day’s transactions because 4Ps recipients were queuing up to withdraw their cash.
“We are hoping to get momentum through the small medium enterprises because these are the touchpoints and the heart of the community,” she adds.
While the Easy Debit Solutions was developed specifically for the Philippine market, Ann said this can be applied in other ASEAN countries.
“We do have plans for a roll out in southeast Asian countries particularly Vietnam and we have discussion in South America,” adds Ann.
Everything is falling into place for Fexco’s growth in the country. The company has promoted Ann into the position of chairperson for Fexco Philippines as they look for other solutions to bring to the country.
“We are just currently evaluating some of these opportunities,” she adds.
Fexco is bullish in the fintech industry, which has been expanding in the Philippines for the last 3-4 years. Ann looks forward to the time when they launch the new functionalities of the Easy Debit Solutions.
Along with the growth of Fexco, Ann also noted an increasing presence of the Irish business community in the country mostly engaged in trading and Fexco is the only one fintech firm.
WORK LIFE BALANCE
But Ann does not want it to be all work for the local Fexco as she makes sure the Philippine team also benefits from the work-life balance that Fexco employees overseas enjoy.
“Work-life balance is very important in Ireland, so we respect the weekends,” says Ann. She has been considerate to workers who cannot come on time because of factors beyond their control like the worsening traffic in Metro Manila.
“Fexco believes in its employees and as an innovative company we value work-life balance and I appreciate that highly,” says Ann, also a yoga practitioner.
She now considers implementing flexi-time work scheme for employees. Work from home is another option because as a fintech company they should be able to work from home.
“We are fully automated so we can work remotely as there are lots of tools that we put in place. We are looking at different options,” says Ann.
As chairperson, Ann is not anymore engaged on a day to day basis but with their technology she is always online. Ann also makes it a habit to visit their merchants because she values their feedback.
“We need to listen by making sure we go out there and talk to merchants and developers and the sari-sari store,” adds Ann, who travels to Ireland four times a year to report to the head office.
Since Ann started Fexco Philippines in 2014, Easy Debit has achieved some important milestones. Under Ann’s leadership, Fexco Philippines became the first fully EMV compliant cash out solution processing P1 billion worth of transactions 13 months from launch. It also became a fully cloud based solution.
But Ann did not see herself becoming the CEO or chairperson of Fexco Philippines. She was just inspired to bring the technology to her country and give Fexco additional business.
“I am more of hoping that the technology will be implemented in the country and being able to deliver the idea that I put forward I became the CEO of the company,” says Ann matter of factly.
Actually, Ann deserves the position. Ann has shown skills in spotting good business opportunities and what makes a good business. Prior to Fexco Philippines, Ann was the first female to have joined the senior management as head of product and planning Skoda Ireland under Volkswagen Group. Back in the Philippines, she had extensive background in the local telco industry having handled important business units of major industry players.
But what makes it so fulfilling is the relevance and impact they make to Filipinos in remote areas having access to cash.
She cited their presence in Rizal where they had 8,000 transactions in just two days. “Instead of using their money to commute, they can now use the money to buy snacks because access to cash is within reach,” says Ann. Its remotest merchant is in Tawi-Tawi where ATM cardholders have to spend P300 to reach to the nearest ATM.
One of its top merchants is a hardware store in Mindoro whose customers are construction workers. They also have a livestock and poultry shop merchant which caters to farmers. Another successful merchant is an ice cream parlor in Muntinlupa, which is now expanding his store.
The Fexco initiative was not left unnoticed. The Easy Debit Solutions was awarded by world’s leading consulting firm Deloitte for financial innovation.
“It is a personal fulfillment and achievement not just in the Philippines but internationally,” adds Ann.
With a robust business, Ann said they are hiring 10 people to augment the existing team of 25 employees. Actually, they don’t need lots of manpower because they employ a lot of automation.
“We are now looking to expand that further and see what we can localize in the country,” adds Ann, who saw big improvements in the skills set among local talents compared to four years ago.
“I feel it a personal achievement and fulfillment being able to contribute in my own way since I’ve been in the private sector,” says Ann.
As Ann and her husband have been working here for the same company, the couple travelled a lot to the provinces and in remote touristy spots like Coron and Malapascua in Palawan where Filipinos still do not have access to ATMs. This only emboldened them some more to push for their business.
Ann believes that what they offer to the market is a technology that is something beyond commercial and that in itself is inspiring.