MMT Explained – Rizza Maniego-Eala, president of G-Xchange


Globe Telecom has recently entered into a new partnership with BPI and Ayala Corp. to set up a new mobile microfinance bank. The aim of this alliance will be to extend loans to microfinance institutions using mobile phone technology to increase financial inclusion and expand the retail network base.

According to the Central Bank’s Deputy Governor, Nestor Espenilla, “The meaning of a truly inclusive financial system is where everyone, including the previously unbanked and underserved, can enjoy reliable and universal access to a range of financial services that are provided by banks and other authorized entities through a wide range of accessible, convenient and cost-effective delivery channels.

The partnership between the Bank of the Philippine Islands and Globe Telecom/G-xchange hopes to provide financial services to more people, including those that were previously unreached by the banking system. A clear and seamless regulatory framework is necessary to ensure that such developments can flourish to create that truly inclusive financial system.”

Rizza Maniego-Eala, president of G-Xchange (100% subsidiary of Globe Telecom) shares some thoughts on Globe’s new investment.

Why did Globe decide to invest in one of BPI’s savings bank (now BPI-Globe BanKO)?

We have constantly been experimenting on new service propositions around GCash in-line with our customers’ feedback and our various test bed results that may try to stimulate a new consumer angle around a more rapid use of mobile money. Our main thrust has always been to try and see how our mobile network and adjacent technologies could help lower the cost of delivering financial services to the rural areas. We have made significant inroads on the money transfer side with our partnership with remittance companies and pawnshops.

However, on the micro-banking side, our solid partnership with the Rural Bankers Association of the Philippines (RBAP), the Microenterprise Access to Banking Services (MABS) and USAID funded organisation have given us the opportunity to leverage on our ability to deliver micro-money transfers securely, instantly, and at a very low cost riding on our text messaging network. What we have not been able to fully participate in was how GCash and our mobile network could further come up with new products or business models that link mobile and other technologies with microfinance activities that could help propagate the financial inclusion to more than half the Philippine population that are still unable to have access to various financial services.

We thus made a 40% investment on a savings bank to be able to test the ideas in our incubation lab that requires a banking license. Once we are able to come up with a few innovations or improve micro-banking procedures, then we will also open up access to these new services to all of our partners.

What role will Globe play in this partnership?

In this partnership, we bring to the table our expertise in running a nationwide retail consumer and distribution network on top of utilizing technology to lower the cost of delivery and stimulate pervasive reach.

How will this partnership affect Globe’s position in the mobile money value chain?

The possibilities are staggering. On one hand, BanKO have access to markets at the base of the pyramid via a low cost telco infrastructure, otherwise unreachable to banks. Globe, on the other hand would have financial services offerings that are outside conventional telco revenue streams. Business models that have been the stuff of white papers are now becoming a reality to us. That I think, says a lot about Globe’s position in the mobile money value chain even if we are just moderately successful in the next two years.

In the end, what we want to do is use our capabilities as a telco to sweep the financial transactions in the lower income areas to the major banks since tapping these markets have never been a viable proposition for them as reaching the base of the pyramid segments entails huge costs with long pay back periods. Utilising our mobile network that spans the entire country and has capacity to handle billions of micro-transactions per day, in a sense, we are building a virtual bridge that connects the unbanked and underbanked market to the banked side, and vice versa.

What criteria did the Central Bank use to evaluate such a partnership?

We have always consulted the Central Bank for any undertaking or idea we are mulling over prior to laying out the necessary ground work. Our relationship with the Central Bank is further strengthened by our equity partnership with BPI, them being a bank. Since the savings bank license we acquired was fully-owned by BPI, it was BPI that processed all the necessary approvals with the Central Bank.

This is a standard acquisition deal where BPI sought approval for the transfer of 60% stake to (20%) Ayala Corp and (40%) Globe. The BSP, however, did evaluate the new ownership and capitalization commitments and standard approvals were also sought for change of name, and other basic banking licenses.

This partnership is just one of a number of strategic alliances Globe has entered into – who else have you partnered with and for what objectives?

We have a lot of upcoming partnerships that we believe will impact the industry but we are still not at liberty to divulge them. Of our current alliances, I have also cited our noteworthy partnership with the rural bank community that is well-entrenched to reaching out to more customers with incomes ranging from $2-5 per day

On the international remittance side, we are present in 300 outlets in 30 countries through our various collaborations with international remittance entities. These partnerships are important in ensuring an integrated mobile money platform for us providing a real link between many Filipinos, whether here or abroad. On pilot mode as well, is an initiative that gave us the honour of the first telco globally to be linked to Western Union’s Mobile Money Transfer Hub. Simply put, any Western Union remitter can choose their Mobile Money Transfer service that offer lower principal requirements and lower service fees, and the remittances are directly sent to GCash accounts here in the Philippines.

Another big partnership that we are working to further grow is that with our strong mobile credit or mobile load distribution network. We are in the final stages of getting the Central Bank of the Philippines’s approval to enable all Globe’s 15,000 sub-distributors nationwide to form part of our cash-in and cash-out network with us being fully responsible for this network’s KYC and AML compliance.

The addition of these 15,000 sub-distributor outlets, together with our existing 3,000 cash-in and cash-out points will significantly increase the accessibility of exchange centres or remittance touch points to our customers. These outlets will boost our ability to deliver remittances from abroad and also aid in lowering the cost of domestic remittances outside increasing access points. By further linking our international and domestic remittance efforts, we hope to help enlarge the pipe that facilitates the transfer of money sent by Filipinos abroad to various provinces here in the Philippines while also strengthening the facility that enables secure, accessible and convenient remittances from one province to another, all within the GCASH system.

There are only two other MNOs in the world who have stake in a bank. What advice would you give to other MNOs looking to make similar investments in terms of working with regulators and getting approval?

It is a fact that we are fortunate that we have a progressive regulatory regime that somehow shares our vision of enhancing the lives of our countrymen. Moving into the financial services space means that an entity needs to work with the Central Bank. As such, one must learn the language of the Central Bank and what its underlying objectives are. Mindspace needs to expand from telco regulations to also include financial regulation considerations.

What remain the challenges to mobile money?

We have a lot challenges but in the grand scheme of things what we want to achieve is the kind ubiquity that the ATM service has accomplished but in a shorter span of time and without the huge upfront costs.

What will become the killer application for mobile money over the next few years?

Maybe the term “killer application” would not be apt for our business. What we are working on is “an integrated revolutionary service” wherein we will witness an increased demand for more sophisticated financial services on the mobile phone in the medium term accessible even to farmers, fishermen, market vendors, who are able to increase their business throughput because of the combined affordable and cheap access to telecom and financial services.

With this, we will see a convergence of telco and financial services in the longer term that will serve as a multiplier effect that will enable the hockey stick growth of mobile money empowering many low income communities as we convert millions of unbanked and underbanked population to growing small and medium micro enterprise businesses.