“Of course, it heightens competition. There are more players, then you have more considerations,” Peaches Cuenco, head of Metrobank’s consumer lending group, said on Friday as the lender rolled out new car and housing promos.
MUFG, the largest financial group in Japan, purchased an 8 percent stake in GCash for about P23 billion, more than doubling the valuation of the Filipino mobile payments giant backed by Globe Telecom and Ayala Corp., the country’s oldest conglomerate.
“We’re trying to plan ahead, trying to be one step ahead and be prepared for whatever happens,” Cuenco said. “Rest assured, we plan to keep all our customers in good hands.”
Big picture
MUFG’s investment in GCash enables the company to access more low-cost wholesale loans, allowing it to further expand its market presence.
GCash, now the country’s fourth most valuable financial institution, aims to rapidly expand its credit business. While it currently targets the country’s vast unbanked sector, this strategy could evolve and overlap with traditional banking customers as the company grows.
Penetrating the unbanked
The company provides credit through products such as GLoan and GCredit, in partnership with CIMB Bank.
“We’re more focused on everyday loans, small loans rather than what the banks do so we don’t actually compete with the banks,” GCash president and CEO Martha Sazon said in a recent interview with Bloomberg.
Sazon stated that their main competitors are loan sharks who charge high interest rates, trapping people in debt.
GCash has so far disbursed P155 billion in loans to 5.4 million borrowers—an average of P29,000 per borrower.
Banking license
Sazon is not ruling out direct competition with banks in the future after the Bangko Sentral ng Pilipinas relaxed limits on issuing new digital banking licenses.
“That’s being discussed, although nothing is definite as of the moment,” Sazon said in the Bloomberg interview.
Miguel R. Camus has been a reporter covering various domestic business topics since 2009.
