GCash for Promoting Financial Inclusion and Sustainability in the

Philippines

Abstract

Among the most prominent challenges faced by financial technology

are financial inclusion and sustainability. It is even more difficult for
developing countries to overcome these obstacles due to persistent
income inequality and limited fintech exploration. Despite being one of
these developing countries, the Philippines is enjoying a rapid fintech
expansion that is best characterized by its leading digital wallet, GCash.
Through recent developments such as a comprehensive, hyper-localized,
and accessible array of services and ESG initiatives, GCash can be
deemed a catalyst for financial inclusion and sustainability in the
Philippines. This paper also aims to show the link between these two
factors and how GCash was able to maximize this critical interconnection.

Introduction

Over the past few decades, technological progress has been

comparable to a slingshot—a static gradual buildup in momentum leading
up to a dramatic launch into the sky. The growth of financial technology
(fintech) in the Philippines is the ideal example, as the pandemic
accelerated the expansion of the fintech sector. Cashless payments and
banking digitalization have become ubiquitous, and numerous countries,
including the Philippines, have quickly accepted this new development.
Although there have been significant improvements and a rise in
capitalization in fintech, the nation has yet to catch up with the rest of
Southeast Asia.

The overarching challenge to fintech, as we have discussed in class,

lies in financial inclusion and environmental sustainability. Policymakers in
developed countries now recognize that numerous, intricate, and complex
factors contribute to financial exclusion. Hence, these nations need a wide
range of service providers, goods, and technologies tailored to their
specific socioeconomic, political, cultural, and geographic conditions.
Likewise, many aspects of fintech business models can contribute
negatively to global warming or climate change due to fossil fuel reliance
and e-waste. The fact that the Philippines is a developing country is all the
more reason to harness the power of finance and technology to attain
sustainable development.

Fintech Landscape in the Philippines

The Philippines has already made significant advancements in going

digital. Since the pandemic disrupted physical services, more financial
transactions are now being done online. Prepaid cards or mobile wallets
can be used to access e-money. Prepaid cards from the country's central
commercial banks have already been distributed, giving them access to
previously untapped demographics. In the meantime, businesses that
offer mobile wallets are driving innovation and taking a central role in the
e-money sector. Filipinos now prefer digital finance over physical banking
for everything from paying bills to managing investment portfolios, and
80% of them believe they will keep using it after the pandemic (Herrera &
Gallego, 2021).

The epitome of mobile wallets in the Philippines is GCash, which

reported a 700% year-on-year increase in transaction volume in June 2020
alone, with registered users doubling in the first half of the year
(Susantono, 2021). This increase has a beneficial impact on fulfilling the
role of fintech in achieving the country’s development goals, as stated in
the Philippine Development Plan 2016-2022 strategy of “Strengthening
the effectiveness of financial inclusion initiatives by focusing on the
efficient delivery of microfinance and micro-insurance products for
Filipinos including those living abroad” (p.239). As an avid user of this
mobile wallet, I aim to discuss how GCash addresses financial inclusion
and sustainability in the context of the Philippines. After learning about
different applications of fintech across the world, I want to take a closer
look into the fintech landscape of my own country.

Financial Inclusion

The pandemic has stressed the need for Filipinos to be banked,

given that the Philippines endured government-mandated lockdowns for
more than a year. According to the Bangko Sentral ng Pilipinas, 51.2
million Filipinos were unbanked even before the pandemic (Asian Business
Review, 2022). Hence, many Filipinos had restricted access to banks,
payment centers, and supermarkets to pay their bills and shop for
necessities. Likewise, the pandemic caused economic consequences for
businesses. This shed light on the importance of cashless transactions.

GCash is a perfect example of a tool that enables the Philippines to

address these concerns regarding financial inclusion by providing citizens
with access to an electronic wallet for sending and receiving money and
paying bills, along with various additional financial services like consumer
loans, insurance, and investment goods. The platform strives to
democratize financial services by making them easy to use, affordable,
and comprehend, especially for those lacking access to traditional
banking. GCash provides a range of services, including GSave, a savings
account with an annual interest rate of 2.6% and no minimum balance
requirement, GInvest, which allows investments starting at ₱50 (approx.
$0.87); and GLoan for loans of up to ₱25,000 (approx. $437).

Furthermore, GCash partnered with various local government units

(LGUs) to help them effectively provide benefits and financial aid to the
population during the pandemic. Through various remittance options
available on the app, GCash also made it possible for overseas Filipino
workers to transfer money to their families back home. Micro, small, and
medium-sized businesses (MSMEs) may expand and future-proof their
operations with the support of the GCash Pro digital business solution. It
offers a maximum ₱500,000 (approx. $8700) e-wallet capacity, five times
the cashback on bank transfers, and payment linkages with real-time
tracking, among other things.

Additionally, GCash concentrates on hyper localization and

collaborations with LGUs to bring financial services to rural areas. Another
feature that I found interesting is the use of local dialects and more
regionalized marketing techniques. Additionally, GCash provides sari-sari
store (small street store) owners extra means of support by converting
them into digital community hubs with GCash Pera Outlet. Local traders,
wet market vendors, and tricycle drivers can accept GCash payments and
use other financial services through these initiatives.

These are only some of the numerous features that GCash offers for
the Filipino people. Beyond the innovative products and services they
extend, financial literacy is equally important to ensure that users
properly maximize their benefits. To attract more users and support the
country's transition to a relatively cashless economy, GCash will continue
educating Filipinos about using digital payments, transfers, and financing
services and creating consumer trust (Bangit, 2022). I often fail to notice
this wide range of programs within the app, so it is impressive to see how
GCash strives to provide services to the underserved and transform their
lives the way they have uplifted mine and secured my future.
Environmental Sustainability

The digital banking movement promises a new world, but can this
new world be green and sustainable? Fintech companies like GCash have
already proven their ability to facilitate and enable low-cost financial
inclusion. Although still in its infancy, this power is currently being used to
connect the dots between economic and environmental advantages and
to provide the groundwork for locating and developing lucrative green
investment and savings opportunities. The future of the financial system
is thus viewed through the lens of fintech, which is why it is more than
just another topic in the field of green finance. Fintech might hasten the
emergence of inclusive and green financial markets and assist in
realigning the financial system toward sustainable finance.

Sustainable finance is defined as "the process of taking

environmental, social, and governance considerations (ESG) into account
when making investment decisions in the financial sector, leading to more
long-term investments in sustainable economic activities and projects,"
according to the European Commission. As the effects of the pandemic
have forced many industries to prioritize effective yet environmentally
friendly solutions, the Philippines should promote green finance to help
mitigate economic changes in the country.
 Alongside working to realize its mission of financial inclusion for all
people, GCash is stepping up its ESG initiatives to create a sustainable
digital economy. It uses technology to support and promote sustainability
and environmental conservation as part of its environmental initiatives.
The convenience and accessibility brought by the digital services of GCash
minimized customers' carbon footprints. This is augmented by the GForest
feature, which allows users to receive green energy points that they can
spend to plant a virtual tree, after which GCash plants a real native tree
on their behalf. As of 2021, the company has planted one million trees
nationwide. This means that over 21B grams of carbon emissions have
been saved, equivalent to the energy used to fuel 25 trips around the
globe.

As an environmental advocate, it is truly amazing to see how GCash

achieved carbon footprint transparency (not a common practice in many
corporate businesses) and scaled up its sustainability program in the
country. The GForest program demonstrates that businesses may
successfully combine cutting-edge technology with innovative
environmental solutions. The fact that GCash is a fintech company
amplifies its obligation to work towards environmental sustainability.
Hopefully, more fintech companies will realize this responsibility, and it
will continue to become a trend.

Conclusion

Financial inclusion and sustainability are two development agendas

with broad and interconnected positive effects on society and the
environment. As GCash uses more technology, prioritizes digital services,
and supports paperless transactions, the pursuit of digital financial
inclusion itself is already addressing sustainability. Through GCash’s
inclusive digital ecosystem, they can incite beneficial and revolutionary
disruption in the Philippine financial services industry. The key takeaway
is that financial inclusion and sustainable development must be fully
acknowledged as interdependent. Such recognition may result in
measures and policies that value the significance of financial inclusion in
the sustainable development agenda. The rise of financial inclusion and
sustainability is ultimately paramount to the future of fintech.
References

Fintech Philippines. (2022, October 11). GCash focuses on hyper

localisation to push financial inclusion agenda. Fintech News
Philippines. Retrieved November 13, 2022, from
[Link]
hyper-localisation-to-push-financial-inclusion-agenda/

GCash breaks barriers to further boost financial inclusion in Ph - Globe.

Globe. (2022). Retrieved November 13, 2022, from
[Link]
[Link]
GCash helps enable sustainable ph digital economy. Orange Magazine.
(2022, April 1). Retrieved November 13, 2022, from
[Link]
digital-economy/

Herrera, K., & Del Gallego, N. (2021, December). The Philippines’ seismic
shift to digital finance: A never-before opportunity for brands. Google.
Retrieved November 13, 2022, from
[Link]
sumer-journey/digital-finance-transformation-philippines/

Ozili, P. K. (2022). Financial Inclusion and Sustainable Development: An

empirical association. Journal of Money and Business.
[Link]

YCPS Marketing & Communication Group. (2021, November). Promoting

sustainable finance in the Philippines. YCP Solidiance. Retrieved
November 13, 2022, from
[Link]
the-philippines