Coins.ph: Anatomy of a Successful Philippine Digital Startup
When Silicon Valley entrepreneur Ron Hose founded Coins.ph in 2014, he only had one goal in mind — to drive financial inclusion in the Philippines and eventually expand to other countries in Southeast Asia which have low penetration of formal financial services.
Ron’s determination, coupled with powerful technology and huge potential for growth in a largely underserved market, made Coins.ph a highly-attractive investment for international and local investors that included Quona Capital, Naspers, Pantera Capital, and Kickstart Ventures — all of which strongly believed in the company’s ability to scale and succeed.
The investors were right. Fast-forward to 2019, Coins.ph is now Southeast Asia’s leading mobile blockchain-enabled platform. A majority stake acquisition in Coins.ph was recently announced by the Indonesian ride-hailing firm GO-JEK, a strategic move that will allow both companies to build something bigger and better for their customers. This acquisition has also allowed its investors to make an exit, which incidentally, makes Coins.ph the first exit for Kickstart, the corporate venture capital arm and wholly-owned subsidiary of Globe Telecom that invests in digital startups globally.
What did Coins.ph do to be in such an enviable position and which other startups could learn from?
Coins.ph is a digital wallet and mobile payments app for the unbanked looking for life-improving financial services. It allows users to easily send or receive cash across online and offline platforms, transact bills payments across registered and non-registered users, or buy mobile load top-ups.
Through the app, Coins.ph has successfully carved out a path to scale and profitability, thereby becoming a compelling fintech player for emerging markets. However, this is not to say its journey has been easy — building a valuable business meant responding to customer demands at a scale and speed uncommon in a highly-regulated industry.
Growth Lesson #1: Solve a real problem. The bigger the problem, the better the opportunity.
In 2013, when Ron and co-founder Runar Petursson did their research, the Philippines had a population of 100 million but only two out of 10 households were banked and only one out of 20 Filipinos owned a credit card. Yet, four out of 10 Filipinos were on Facebook.
Other emerging economies were in a similar position. For Southeast Asia’s population of 618 million, 59% were unbanked and 95% did not have a credit card although most were online or owned digital identities.
With this socio-economic environment where mobile penetration is high but access to financial services is low, Coins.ph saw the opportunity to reach out to a bigger number of people and make it very easy for them to access financial services directly from their phones.
“There were a few things that excited me about the Philippines, which led me to establish a fintech startup here in 2014: (1) the economy was growing at 6-7%, faster than other developing markets in Southeast Asia but at the same time, a large section of the population was not included in that growth — this offered me an open area to create social good; (2) there was low penetration of technology, and how technology was being applied that will bring real impact and change in people’s lives; (3) the operating cost here was low, which was conducive for innovation since the cost of experimentation was not so high; and (4) the Filipino culture and mindset, which made me and continues to make me feel right at home,” Ron explained.
Growth Lesson #2: Differentiate.
Coins.ph’s stickiness as a product is anchored on two key pillars: a powerful technology at its core and ease of use for customer adoption.
The use of blockchain as its underlying technology has allowed the company to provide instant, global cross-border settlement, and access to a global network of fintech services. At the same time, the team regarded user experience as a product, not a by-product of a great design, and so they made the onboarding of new customers fast, easy, and seamless thereby allowing more time spent transacting on the app than on learning how to use it.
The recognitions that Coins.ph received — the first company in Southeast Asia to be regulated as a Virtual Currency Exchange and Electronic Money Issuer (e-wallet) as well as the first virtual currency provider based in the Philippines to be issued the “Virtual Currency Exchange” license by the Bangko Sentral ng Pilipinas (BSP) — serve as testaments to the product’s compelling value proposition, and its differentiation from earlier mobile wallets.
Growth Lesson #3: Scale.
Coins.ph has wisely used its capital infusion from investors to deliver new and competitive products that grabbed market share at a faster clip versus entrenched incumbents in the Philippines, proving the team’s ability to deeply understand the market it serves. The team is also skillful in partnering with different ecosystem players, even competing ones whose own products and resources such as deep talent bench and geographical reach complemented Coins.ph. As a result, the startup was able to triple its user base from 1.5 million to 5 million in under a year, and has developed one of the largest cash distribution networks in the country with over 33,000 partner locations nationwide.
The Way Forward: GO-JEK and Coins.ph working together
When asked how he feels about the GO-JEK acquisition, Ron replied that “it was clear to us that there were strong synergies between the two companies. Together, we can work on creating a cashless society built on the backs of our products without sacrificing our respective missions, visions, and values.”
Meanwhile, Minette Navarrete, Kickstart president and vice-chairman, viewed GO-JEK’s acquisition of Coins.ph a step in the right direction and should invite a closer look into the reasons that made Coins.ph a strategic acquisition for GO-JEK.
“While a lot of effort has been undertaken by many parties over the years, and we’ve seen progress in how both private and public sectors engage with startups, the universally accepted indicators that define a robust startup ecosystem have yet to manifest in the Philippines, i.e. high deal flow, large investment sizes, a critical mass of significant exits whether in the form of IPOs or acquisitions by global and regional giants like Amazon, or Google, or Go-Jek,” Minette said.
She added: “We’re thrilled for Ron and the Coins.ph team: the Coins.ph exit is an important win for the Philippines. For startup founders, it is both proof and a pathway for scaling technology solutions that create measurable market value; for investors, it’s concrete evidence that the Philippines presents attractive opportunities equally as a source of high-value investible startups as well as a compelling consumer market; and for the government and corporate sectors, the Coins.ph exit demonstrates how digital startups are not just a kind of MSME (micro-, small- and medium enterprise), so that the startup-specific policy and programmatic interventions that are being crafted now can genuinely increase tech startups’ chances of massive success.”
Coins.ph represents one of the first large exits for a startup founded in the Philippines in recent years. It leads the way for what will be many more to come.
Apple and Xiaomi Continue to lead with Wearable shipments reach 84.5 million in 2019
International Data Corporation (IDC) released global smartphone shipments and India smartphone shipments during Q3 2019 recently, and now it has released the report for worldwide wearable shipments during the 3rd quarter of 2019.
According to the report, global wearable device shipments reached 84.5 million units during Q3 2019 with a 94.6% increase year-over-year and is a new record for shipments in a single quarter. Out of the 84.5 million units, Hearables alone accounted for almost half the market and it was followed by smartwatches and wrist bands.
In the list of top 5 wearables companies by shipment volume, market share, and YoY growth, Apple leads with 29.5 million shipments and a massive 195.5% YoY growth. It is followed by Xiaomi with 12.4 million shipments, 66.1% YoY growth, Samsung with 8.3 million units, 156.4% YoY growth, HUAWEI with 7.1 million units, 202.6% YoY growth, and Fitbit with 3.5 million units and 0.5% YoY growth. Other companies account for 23.8 million units with 40.4% YoY growth.
In the list of global wearables market by product category shipment volume, market share, and YoY, Earwear shipments account for 40.7 million units, Wristband for 19.2 million units, Smartwatch for 17.6 million units, and others for 7.1 million units.
The State of Cloud Computing 2019
With the rise of disruptive digital technologies, businesses are constantly finding ways to thrive in the ever-changing digital world. As we are now on the cusp of these momentous changes, organizations are now seeing that the cloud transforms into a dominant enterprise environment.
The cloud is now fully ready for mission-critical and, the old-style tech used to power their systems and apps are now being referred to as legacy systems, which can still be useful for organizations with processes that have been tailor-made to become critical and fundamental for the business performance. Global organizations, and even local players, are also seeing the endpoint of their roadmaps and support for old propriety system. They are also starting to develop a serious plan to move major applications into the cloud at an unprecedented scale, especially that these platforms are now available for various workload and application.
The rise of cloud natives
Cloud-native computing takes advantage of many modern techniques to optimize resources for overall agility and maintenance of applications. It would be an efficient mainstream process for creating and deploying applications in the cloud by placing them in handy containers for easier management. This process enables the business models of start-up or leading-edge enterprise to deliver extreme scalability.
Companies that are currently not in the cloud should migrate by following three different ways. The first two actions are simple enough; either go into the cloud as is or adapt existing processes as you enter the cloud, adding changes to the former design.
The third state would require a complete transformation of the current architectural process. This path means moving forward and develop another blueprint for building applications that are “born in the cloud,” which offers a competitive and practical advantage.
Understanding Hybrid IT and the poly-cloud
Businesses would, of course, leverage this migration to technology. However, the shift in terrain would bring a realization that not all clouds are equal, and that different types of clouds are suitable for different projects. For example, common public clouds are computing services made by third parties and are often freely available on the internet, while private clouds keep specific data in an organization secure and isolated from the public.
Companies, therefore, need to recognize their individual needs and choose the solution that reaps the maximum benefits. They must determine whether it is adequate to stick with either a public or private cloud, or a combination of their services.
For Fujitsu, it has seemed obvious that a hybrid IT, which is an optimal mix of public and private cloud, along with a sprinkling of on-premise IT, is the logical future of enterprise environments.
In spite of this, doubts have momentarily appeared in certain quarters. However, these doubts are disappearing due to the optimal construction of hybrid IT, as well as the growing offers of private cloud performance, regulatory compliance, security, and proximity to other services. Public cloud alone isn’t the solution.
A single organization may use two types of cloud infrastructure for separate tasks—this is called a multi or “poly-cloud.” Meanwhile, a hybrid cloud is a strategy that intermingles data with access to multiple public and private clouds’ benefits and functions.
The large overlap between this new concept changes the way each cloud in a poly-cloud supports the differentiation of business by disrupting the impact of its commercial model. We should consider that the massive consolidation of the hyper-scale platform market means that individual businesses are responsible for configuring and integrating which model would drive them to stand out.
Getting ready for AI everywhere
The migration and implementation of cloud computing services offer countless possibilities in this new technological age. The integration of Artificial Intelligence, for instance, could potentially improve existing cloud solutions.
Some forms of AI have arrived and we are badly mistaken to think that it is a technology still lying somewhere in the distant future. Advanced technological trends, such as blockchain, IoT, data analytics, and the Robotic Process Automation prove that everything will be driven by AI and, the speed of public adoption would be at least equal to former technology.
Companies are also seen as rising as everything becomes smart and enabled. Take the Robotic Process Automation as an example. AI is now boosting daily business operations by contributing impacts on simplicity and automation, all while lowering cost.
Cases of sudden outages is a no problem in an enabled AI-operated world. The system would just flip users to another hyper-scaler while their preferred cloud is down, and switch them back again on that major cloud platform once it is online, without involving another human being. These situations are the reality of our new world. We control the specifications of AI and allow them to propel us forward.
Having said all these, there are some human-centric issues that Fujitsu needs to address this year. Among these key concerns is the protection of intellectual properties in a transparent world, as well as ownership and accountability for AI.
We should shoulder some responsibility when providing customers with uninterrupted service. This is based on our “Human Centric Innovation” ethos, where we believe that AI isn’t a magical incantation to fix all business transactions. Like many disruptive technologies, it needs to be fed correct data to assist people. We should create a technology that recognizes accountability when making decisions.
Co-creation of a trusted business
As a complement to our ethos, our Fujitsu Technology and Service Vision 2019 also describes a concept called “co-creating a trusted business.”
Nowadays, businesses are faced with the complexity of a more connected and globally integrated world. This complexity is proving that many of the traditional structures and institutions we relied upon are inadequate and breaking down. And, everyone is keeping up with data that grows faster than it can ever be.
All organizations should, therefore, cultivate a culture of co-creating a trusted business. This mindset enables businesses to contribute to co-creating a more sustainable world with their customers and ecosystem partners.
To achieve it, organizations should take three steps: architect a purpose-driven organization to define what they can contribute to society, customers, and even for the future; build a human-centric organization to ensure that they can empower people to collaborate; and, drive the business with digital to turn their available data into valuable insights while maintaining and empowering its trustworthiness.
The digital world presents multiple opportunities for organizations to thrive. At Fujitsu, we await a brighter tomorrow for all businesses, especially in the Philippines, as they grasp the many advantages and benefits that the cloud has to offer.
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