Fitch Solutions believes that the Philippines’ regulatory and demographic settings are generally favorable to financial technology (fintech) adoption, with the country’s wide, dispersed population providing a sizable market for mobile banking.

“Regulatory backing and the country’s demographic environment have created a supportive environment for the uptake of mobile banking services, giving a positive outlook for investors,” it said in a commentary released on Thursday.

The Fitch Group unit, for example, noted the Department of Information and Communications Technology’s new Connect, Harness, Innovate, and Protect (CHIP) framework, which intends to speed up the country’s digital transformation. A critical component of CHIP is the proliferation of digital services like as mobile payments, telemedicine, and e-commerce.

The Bangko Sentral ng Pilipinas has also taken steps to ease the transition away from cash by setting targets for 70 percent financial inclusion and digital payment methods accounting for 50 percent of total retail transactions by 2023, according to the commentary.

“The Covid-19 (coronavirus disease 2019) pandemic has underscored the importance of developing a robust digital infrastructure given the emphasis on social distancing and global pivot away from cash and physical banks,” Fitch Solutions also emphasized.

Given the prevalence of cash payments in the Philippines, government help for the adoption of mobile payments is crucial, it also underscored.

Citing the 2017 World Bank Global Findex Report, the Fitch unit said, the vast majority of the Philippines’ population receives government payments and pays their utility bills in cash, with 58 percent of the 6 million people receiving government payments in cash owning a mobile phone.

“Therefore, initiatives like CHIP that aim to digitise government services and create a conducive environment for the development of fintech products are vital for their uptake and realising returns.”

The Philippines’ significant unbanked population, which is one of the largest in Southeast Asia, presents a large market for fintech services, which Fitch Solutions believes would give investors with great returns.

“The lack of banked population in the Philippines does present downside risk, but as the adoption of digital financial services has grown significantly in recent years, we believe the outlook is promising.”