Can Mynt compete against Philippine digibanks?

Written by Kapronasia || September 09 2021

Ant Group-backed Mynt has grown expeditiously thanks to the success of its e-wallet GCash in the Philippines. In January, Mynt closed a funding round that raised US$175 million and brought the company close to unicorn status. In late July, Mynt’s chief commercial officer Frederic Levy told Nikkei Asia that the company was aiming to become a “double unicorn” – with a valuation of US$2 billion. But it is unclear if Mynt can maintain the same level of growth now that the Philippines has five genuine digital banks.

At the height of Ant Group’s success, many of its overseas investments looked like a sure thing, especially in Southeast Asia where many countries have large unbanked populations but most adults have smartphones and an internet connection. For a time, GCash appeared like it might serve as a key link in a regional payments ecosystem that Ant would operate across Southeast Asia. 

That was then. Now Ant is busy with restructuring and meeting onerous regulatory requirements. It does not have the same resources it once did to deploy in Southeast Asia. Given that Ant holds a 40% stake in Mynt, that is going to make a difference in the company’s growth prospects. 

Of course, Mynt will cite its user numbers, which to be sure have surged since the pandemic hit. It now claims to have 44 million users, compared to just 20 million in 2019. GCash also says that is on track to more than double the value of transactions on its app to more than 2 trillion pesos ($40 billion) this year. 

Impressive, but GCash is now up against digital lenders that can offer savings and lending products such as Tonik Bank, UNOBank, UnionDigital Bank, GoTyme and Overseas Filipino Bank. Without a banking license, GCash has to rely on partners for those and other key products. 

However, GCash has said that it prefers to serve as a platform for other financial services providers rather than a direct provider. Some of its partners include Malaysia's CIMB Bank and Singapore's Singlife, which respectively support GCash' savings and insurance offerings. Levy told Nikkei that GCash may also “take a page from the playbook of Robinhood” for future products and add more merchants to its e-commerce portal GLife. 

The question is if serving as a platform for the financial services products of other providers will be profitable for GCash. Margins may be better for digital banks that can offer products of their own unless GCash is able to persuade its partners to absorb the lion’s share the customer acquisition costs.