Business
C2
SUNDAY, FEBRUARY 12, 2017 business@thestandard.com.ph
MANABAT...
From C1
everyone in the firm,” he says. Such challenges continue to this year, when the local accounting and auditing sector faces new standards meant to instill transparency in the industry, in the face of global and economic developments. Auditing firms, according to Manabat, are now required to review audit opinions and financial statements together with issues encountered during the auditing process and how these issues are addressed. “This is a big step towards transparency. The government is pushing us to stick to the regulatory standards that further professionalize our ranks and prevent us from being embroiled in controversial and embarrassing situations,” he says. “Not only clients books are subject to audit, we also face audit by the government as ordered by the Securities and Exchange Commission,” he says. High-profile cases such as that of Enron in the US have affected the auditing industry. That led not only to the bankruptcy of Enron but also the dissolution of its auditing firm. Manabat says cases like these affect the image of the industry in general, the reason why the SEC and the Philippine government are enforcing stricter regulations to increase the transparency of the profession. Manabat, who has about 40 years of track record in the field of accountancy, started the company 10 years ago with his friend and co-worker Emmanuel Bonoan. The firm’s next generation of leaders is a team of young and bright partners who have established new service lines. To continue its growth story, the firm recently announced that 2017 is a transition year, with Sharon Dayoan, the company vice chairman and head of audit, assuming the chairmanship by January 2018, Manabat who will become chairman emeritus. Bonoan is the vice chairman and chief operating officer while Henry Antonio is vice chairman and head of advisory. Guided by the KPMG values of excellence, trust, and commitment to the firm’s clients and people, they assembled a dynamic team of young leaders to continually motivate the rest of the organization – providing audit and assurance services and advising clients across a diverse range of industries on multifaceted business and tax needs. The past decade made an interesting journey for the growing band of resilient professionals as they have developed into one cohesive team, each day affirming their commitment to be relevant to the firm’s clients and the Philippine business community. Manabat has been a prominent advisor to many corporate and government agencies on good governance principles and practices and is a sought-after resource person on matters pertaining to corporate governance, internal audit, financial reporting and risk advisory topics. He has particular interest in the insurance industry, having been the practice leader for the sector. His professional career is capped by his assumption of the chairmanship of the KPMG R.G. Manabat & Co., a member firm of KPMG International. The company has recently released the 2016 consumer market report, accounting the big strides in the consumer durable good category and its contribution to the local economy. The report cited the significant contribution of automobile and housing markets as two of the biggest contributors to the country’s economy, in general. Interest rates have been instrumental to the growth of the consumer market due to lower interest rates ranging from 5 to 6 percent that allowed greater flexibility for borrowers to file for loans either for an auto loan or a housing loan. However, pending regulations and policies, specifically on VAT and excise tax measures, might affect consumer appetite, albeit short-term impact at the onset, according to the study. The report mentioned two ways that will dampen consumer appetite first is the slowing of economy due to less remittance from overseas Filipino workers. The economy has always been shielded from world economic crises because of the fact that OFWs continue to contribute significantly to the domestic economy. The second is a change in the macroeconomic policies of the country that may result in the deterioration in investor confidence.
SILICON VALLEY EXECUTIVE CHANGES PH REMITTANCE
F
our years ago, an American information technology professional based in Silicon Valley packed his things and decided to fly to the Philippines where he did not know anybody. Sensing a great opportunity, he built a startup financial technology company that would eventually redefine the local financial sector, including the remittance business.
“We started with a very simple vision, which is how to help more Filipinos connect directly to financial services,” Ron Hose, the 38-year-old founder and chief executive of Coins.ph, says in an interview in Ortigas Center. Coins.ph, a mobile blockchain-enabled platform which uses the underlying technology infrastructure of Amazon Web Services, enables Filipinos to move or transfer money at the least cost and easiest way, according to Hose. With the use of a smartphone, it enables customers to remit funds from anywhere and anytime in the world to the Philippines, receive remittances, pay bills, purchase and top up phone credit and pay for goods and services with a virtual debit card. Hose says access to capital and financial services is a real equalizer. “If you are an OFW and you are sending money back home and you are paying like 6 or 8 percent in remittances fee, it is like working one month a year for free. It should not cost that much to move money from one place to another. There is no good reason for it, not in 2017. When you make it easier for people to move money, then they can access services,” he says. Hose says remitting funds through Coins.ph cuts the fees substantially. “If you are to send P1,000, you will be charged half of that for remittance fee. So you have little control for the expenses and how the funds are being used. With our product, you can control, you can send small amounts, because we don’t have to use the traditional setup in banks. Even if you want to send P100, you just pay a percentage of that. For peer to peer transaction, it is free. It is when you withdraw here that you pay the withdrawal fee,” says Hose. “Overall, remittances cost about 6 to 8 percent. With us, what we typically see is around 2 to 3 percent as average cost. With the smaller transaction, it becomes more pronounced. We don’t have the fixed fee component. We have a lot of partners like banks, financial institutions, convenience stores, retail outlets. For banks, we support cashout to 30 major banks in the Philippines,” he says. He says Coins.ph also makes it much easier to deposit cash and settle bills. “If I want to send funds through a BDO account or I just want to pay my rent or pay someone, you have to run and deposit to their account. Don’t do that ever again. Just use Coins.ph. It is convenience. I pay my rent, car bill, Internet bill and condo fees through Coins. ph. I just remit funds to their accounts. If you want to send funds for cash pickup, you can send to any major Smart Padala Center. If you try to send money through door to door, you can send to GCash,” he says. Coins.ph also has a partnership with Security Bank that allows customers to send funds to an ATM, and the recipient can go to the ATM and collect the funds even without using an ATM card. “We send them a code through SMS. They put in the 16-digit code and they can collect the funds. A lot of customers are already using this and it is 24/7,” says Hose. Coins.ph has built a network of multiple partners across 17,000 locations in the country, including banks, pawnshops, department stores and convenience stores. “What we really do well is making easy for people to move money, from one place to another, to make a payment, to send money from bank to bank, at the least cost and most convenient way,” says Hose, who was a founding partner at Innovation Endeavors and a co-founder TokBox, two Silicon Valley groups. He holds a Bachelor’s degree in Computer Science and a Master’s degree from Cornell University in New York. Hose says from half a million customers in mid-2016, he expects “a few million customers” to use Coins.ph for financial transactions this year. Coins.ph facilitates millions of transactions worth billions of pesos each month.
His journey to the Philippines started four years ago, when he felt the need to build a company with a positive social impact. His research pointed him to Southeast Asia—the world’s fastest growing market. Among Southeast Asian countries, the Philippines caught his attention the most. “I did a very systemic search. I was looking across Southeast Asia. I was looking market by market, investors, entrepreneurs, learning about every country and the things unique to it, and after doing that for a few months, it became very clear to me that the Philippines was the place I wanted to be in. I actually did not know anyone here. That was four years ago,” he says. “Even though the economy here is growing very fast, at the same time people still lack access to basic services like healthcare, education, finance and commerce,” he says. “If you look at the Philippines, more people have Facebook accounts.” Hose and his partners spent eight months studying the Philippine market, looking at different opportunities. “It is a great place to start business in, because it is a big market, there is a lot of things you can solve with technology, and it is English speaking. It is a good hub to service products for other countries in the region. But for me, there was another aspect to it, which is personal. Building a company is not like a two or three-year project. It is five to 10 years which is a significant part of your life. And I want to be somewhere that I actually like, where I personally enjoy living in. From day one, I really thought I blended in. Being here was a very important part of what we are doing. I don’t think I would ever think of building a business without committing to the country,” he says. Hose toured around Metro Manila, including the slums of Tondo, and witnessed how helpless the poor people are. His market research of the Philippines highlighted one very important issue, which is the lack of access to financial services. “The thing that came back over and over is how difficult and expensive it is to access financial services. Even doing basic things like moving money around, like sending money to relatives to making payments, or paying your health or employees, it is very difficult. That’s where we centered our company. We saw a gap right in the market,” he says. “In the Philippines, the official banking penetration is 30 percent. So more than 70 percent of the population does not have bank accounts at all. If you start deducting dormant accounts, it will probably fall below 10 to 15 percent. So that means 85 or 90 percent are not actively using bank accounts. We are just trying to bridge that gap. We are not like a disruptor company. We are an enabler company. Our goal is it connect the other 90 percent,” says Hose. Hose does not want to call Coins.ph as a disruptor. “When we say disruptor, we think of a company that is trying to replace something. We are not trying to replace what is in the market. We are trying to make what is in the market work more efficiently. If a bank is only able to serve a million out of 100 million customers in a market, I want to figure out how to help them reach out to 99 million customers,” he says. Hose says transferring money should not be hard and costly with today’s technology. That technology is cloud and mobile. “Being a fintech [financial technology] company, we use mobile very heavily. We use Cloud. We use blockchain to settle the transaction,” he says. “We did a thing that is gonna change the financial industry and the thing that is enabling us is technology. It is mobile and cloud, those are the things that empower us,” says Hose. Hose says the customer base of Coins.ph was growing
faster than they anticipated, but Amazon Web Services enables the company to scale up immediately. “We get millions of requests on our servers everyday. It is very hard for us to anticipate growth. We thought December was going to be our strongest month. But January was even stronger than December. It was really hard to predict. What allowed us to move fast is how our underlying technology and infrastructure is built. Every thing we do is actually built in Cloud. We have been using AWS pretty much from day one,” he says. Coins.ph has a 50-person team, supported by AWS infrastructure. “We are a small team. We have a limited number of engineers and we want to dedicate all of our work to making a better product for our customers. Maintaining infrastructure is secure. If we have to maintain all the certification and all the practices that Amazon has in its own data center in our own data center, that would require probably a team that is at least the same size of what we have right now just to do that,” he says. Hose says with the help of AWS infrastructure, Coins.ph has gained the acceptance of the market and the regulator. “We were the first one. Everything we did was running ahead. The first thing we realized is that even though there was no regulation, we acted as though we were regulated. So we started implementing everything from Amla [AntiMoney Laundering Council] controls and KYC (know your customers). Subsequently, we applied for money transmitter license, which was the closest thing for us to be regulated. For me, this is about making sure our customers are protected and they can feel safe transacting with us,” he says. Coins.ph acquired a remittance license from Bangko Sentral and registered with the Anti-Money Laundering Council of the Philippines last year. “We are regulated as a remittance agent. With the new regulation, they are saying that if you are doing this business, there are some things we need to follow, but at the same time, there are a lot of things we have been tackling over the last three years. So we came relatively prepared,” he says. “Our acceptance and legitimacy is coming from our customers, primarily. Of course, it is very viable and important for us to be recognized by government and regulators. At the end of the day, the thing that is most important is the service we provide to our customers,” says Hose. Hose says Coins.ph aims to have a few million customers this year, but the long-term goal is to enable every Filipino to have access to financial services. “Our goal remains the same when we started the company. We would be happy that by the end of it, basically every person has direct access to financial services,” he says. He says the new regulation of Bangko Sentral covering virtual currencies is a recognition of the financial technology that shapes the industry. “We are very lucky because in the Philippines, we have a regulator [Bangko Sentral] that is very forward thinking. They take a lot of great care and caution with customer protection and ensuring the integrity of the system and protecting Filipinos from systemic risk. At the same time, they understand the value of technology and innovation and how we can actually help drive financial inclusion,” he says. He says Coins.ph is reinvesting its revenue in research and technology to support the rapid growth of its customer base. “Operationally, we are generating positive revenue, but then we continue to invest heavily in R&D,” he says. In summing up the contribution of Coins.ph to the Philippine financial industry, he says: “If you are making 100 payments today and you are sending runners to do it, you should not. You should come to us and we will help you do it more efficiently.” Roderick T. dela Cruz
TAKE A BREAK IN HECTIC MAKATI MANY offices in the Philippines are starting to allocate space to provide employees with a place where they can create, meet, recharge, de-stress, stretch or rest their eyes from the screen: the employee break room. But not all offices have enough space to accommodate this welcome feature. Unless you work in the Makati CBD. The Alphaland City Club, along Ayala Avenue Extension, offers three floors that cater to all the business, lifestyle and fitness requirements of an active business executive. The Club has a fully equipped athletic complex, including indoor tennis, basketball, squash and bad-
The City Club is the perfect place for business executives to enjoy the best of both worlds-work and play.
minton courts. For relaxation, members can use the wellness spa with pool and jacuzzi areas. For important business talks and even confi dential negotiations outside the office,
private and full-service function rooms are available for meetings or events. For a daily serving of leisurely but affordable meals, members can choose one of eight specialty restaurants, while al-
lowing their children to enjoy the playground and game rooms. “Nowhere else in Makati will anyone find all of these options in a single, exclusive club,” said City Club general manager Nic Belasco.