GCash aims to end Filipinos’ dependence on loan sharks

Mobile credit designed to replace ‘5-6’ lenders who prey on poor

With the introduction of its mobile lending feature GCredit, the country’s leading mobile wallet GCash aims to end the dependence of Filipinos on loan sharks, or what is commonly known as “5-6” lenders preying on the poor.

Chris Manguera, Chief Marketing Officer at Mynt (Globe Fintech Innovations Inc.) which operates GCash, said Mynt’s vision is to build a cashless ecosystem where Filipinos can pay for goods and services, and easily access credit using their smartphones instead of running to 5-6 loan sharks.

In a country where 66% of Filipinos don’t have access to banking and financial services, 34% of municipalities don’t have physical banks, and 90% don’t have a credit score, cash-strapped citizens are forced to seek alternative sources of credit.

“In the end, what Filipinos do—and this is very common—is to go to someone they know. They call it a 5-6 lender, and they will borrow to make ends meet for the next month. Usually for you to borrow there, you will need 20% interest to pay back. That’s why it’s called 5-6: you borrow 5 today and pay 6 the next day,” Manguera said.

Speaking to participants of the American Chamber of Commerce of the Philippines' Financial Technology Series 2: Showcasing Best Practices in the Philippines, Manguera said the primary objective of Mynt is to create a cashless ecosystem that will lead to finance for all.

GCash, a payment and financial services mobile phone application, is used by 20 million Filipinos. In 2018, it introduced GCredit, the first fully mobile, QR-based credit line available in the Philippines.

As of June, GCredit has extended P1 billion in credit to consumers through 250,000 credit lines, successfully scaling a lending model that is data-driven and fully digital to provide loan solutions to the underserved.

“Finance for all. At the end of the day, what we want is access for people that don’t necessarily have easy access or means to have access to financial services,” Manguera said.

He said Mynt leveraged on the ubiquity of mobile phones in the Philippines, where there are 120 million SIM cards, 71 million mobile phones, 48 million smartphones and 60 million online Filipinos.

"What we have is a platform; what we do from that platform is to create a solid base of mobile wallet users," he said.

First launched by Globe 15 years ago, the use of GCash has grown exponentially since Globe partnered with Ayala and ANT Financial, a company that has one billion mobile wallet users worldwide.

From a simple wallet account, Mynt added other services to GCash, such as bills payment and money transfers, Manguera said.

Using data from the use of these services, Mynt assigns GCash users a credit rating called GScore, which then becomes the basis for a credit line that will be extended to GCash users. This credit line can be used to pay bills and make purchases in partner merchants. GCash only charges 3% interest per month for the loan.