Bitcoin wallet raises $5 million to increase Southeast Asian financial inclusion

Philippines-based mobile Bitcoin wallet, Coins, recently announced US$5 million in a new funding, specifically aimed at expanding basic financial services to the unbanked population throughout Southeast Asia.

The Manila-based bitcoin wallet service was founded in 2014, by Silicon Valley entrepreneurs Ron Hose and Runar Petursson. The company provides consumers with direct access to basic financial services such as sending and receiving money, bill payments, remittances, and mobile top-up from within a Coins account. Customers with or without a bank account have access to online shopping at over 63,000 merchants who accept the digital currency, according to the company.

Coin’s mission is to increase financial inclusion by delivering financial services directly to people through their mobile phones. To date, the company reports that it has signed up over 500,000 users and has already expanded from the Philippines into Thailand.

“When you use your Coins.ph account, you are in fact using digital currency to store value and purchase services.”
— – Coins.ph

Using bitcoin keeps the costs low for sending money, although users might not be aware that they’re holding a bitcoin balance since their default wallet balance appears to be in Philippine pesos. To accomplish this, the service has introduced the concept of a Peso lock wallet, where bitcoins are tied to a specific peso value using the current coins.ph sell rate.

Leveraging bitcoin in this way has enabled Coins to connect its services to partners with a presence in over 40 countries and offer instant, low-cost settlement of cross-border payments and remittances. For overseas workers who are currently paying 6-8% to send funds through services like Western Union, this means a savings of up to 80% in fees.

Getting cash into and out of a Coins mobile wallet should be simple. The company has partnerships with 23 banks, remittance centers, financial institutions, money couriers, and last-mile retail outlets. Coins’ network spans over 22,000 cash disbursement and collection locations in the country alone.

"We are very excited to have such a great network of partners behind us who share our vision of increasing financial inclusion. In the coming months, we will continue to build new partnerships with banks, financial institutions, and retailers to connect customers across Southeast Asia with best-in-class financial services."
— – Runar Petursson, Coins CTO and Co-Founder

The Series A funding round was led by the Accion Frontier Inclusion Fund. The investment arms of Globe Telecom and Smart Communications, the Philippines’ biggest telecommunications companies, were among the investors. Also included were Eric Schmidt’s Innovation Endeavors, Pantera Capital, Digital Currency Group, Wavemaker Labs, Global Brain, BeeNext, and Rebright Partners.

Accion Frontier Inclusion Fund claims to be the first global FinTech fund for the financially underserved. It is managed by Quona Capital, an early growth-stage venture firm focused on FinTech for underserved consumers and businesses in emerging markets. The fund invests in technology and companies that promote financial inclusion for people without access to basic financial services.

Accion is an anchor investor in the Inclusion Fund, and the largest US nonprofit microfinance network dedicated to making affordable financial services globally available. They have helped build 64 microfinance institutions in 32 countries on four continents, reaching millions of clients.

The Accion Venture Lab has been providing seed capital and support to innovative financial inclusion start-ups. The Lab hosted a three-month program earlier this year, and recruited 12 ventures that increase access to financial services for underbanked Mexicans. Bitcoin mobile wallet Volabit was among them.

Currently, around 2 billion people do not use formal financial services, 264 million of which are in Southeast Asia, according to José de Luna-Martínez, the Lead Financial Sector Specialist of the World Bank Group. “Many of them save their money under the mattress and borrow from so-called ‘loan sharks’, paying exorbitant interest rates on a daily or weekly basis,” he said in February.

To address the problem, the leaders of the Association of South East Asian Nations (ASEAN) have made financial inclusion one of their top priorities for the next five years.

Financial inclusion is not homogeneous in Southeast Asian countries, De Luna-Martínez explained. Some have achieved almost universal financial inclusion such as Singapore, Malaysia, Thailand, and Brunei Darussalam, while others face various challenges.

“Currently, only 50% of adults in ASEAN have an account at a financial institution,” Luna-Martínez claims, and ASEAN is discussing a specific financial inclusion target at around 70% for 2020. ”Rates of financial ‘exclusion’ are higher among the poor, those living in rural areas, and those who are less-educated,” he explained.

The Lead Financial Sector Specialist asserted that demand for financial services will rise. He suggested that one immediate action to accelerate financial inclusion is to digitize all government payments such as wages, social transfers, and payments to suppliers. “This action alone would bring millions of people into the formal financial system in ASEAN countries,” he claims.

“The challenge is to channel more remittances transactions through financial institutions, money transfer operators or mobile phone operations, so that the 52% of adults who reported sending remittances in cash shift to safer and cheaper ways to do so in their home countries.”
— –  José de Luna-Martínez, World Bank Group Lead Financial Sector Specialist

While financial inclusion is struggling, the use of mobile phones is skyrocketing. “Mobile broadband and mobile phones (particularly smartphones) have become an integral part of life,” states Ericsson Mobility.

Ericsson demonstrated that mobile subscription penetration exceeded 100 percent in most parts of the region last year, with the exception of Bangladesh and Myanmar. In addition, Australia, Singapore, Malaysia and Thailand are expected to exceed 100 percent mobile broadband subscription penetration in 2016.

By 2021, Ericsson predicts that Vietnam, Australia, Thailand and Malaysia will have a smartphone subscription penetration above 100 percent. During the same period, the company expects the number of smartphone subscriptions in Bangladesh, Philippines, Myanmar, Indonesia and Vietnam to more than double. “Smartphone subscriptions are anticipated to increase at a Compound Annual Growth Rate (CAGR) of 15 percent, up until 2021,” Ericsson claims.

The Mobile technology company found that Facebook is the number one smartphone app in the Philippines, based on the number of monthly active users. According to Facebook Internal data 241 million people were using the platform across Southeast Asia in December 2015, 94% of them through mobile.

“Southeast Asia is a dynamic mobile first region, and the fastest growing for Facebook,” said Kenneth Bishop, Managing Director of Facebook Southeast Asia. The company revealed that Thais and Singaporeans are the heaviest Facebook users. They send nearly twice as many Facebook messages to businesses than the global average.

Many businesses are leveraging the social media giant to expand their businesses and grow their customer base. “The reason why facebook chat is the preferred messenger is because you can use it without a data plan here in the Philippines,” Luis Buenaventura, the CTO of Philippines-based BloomSolutions told BNC recently.

According to Facebook’s data, e-commerce retailer Lazada grew its fan base by 60X in one year, reaching 90 percent of the online population in the Philippines, and 80 percent of the population in Indonesia, Malaysia and Thailand. Established brands such as NESTLÉ are also working with the company to reach more customers in the Philippines. “Facebook has helped us reach the growing number of Filipinos online,” according to Miguel Molina, Brand Manager of NESTLÉ TEMPTATIONS.

"In the Philippines, more people have a Facebook account than a bank account. We’d like to make access to financial services as easy and approachable as getting a Facebook account."

• Ron Hose, Coins CEO