Main trends

The Philippines emerged as the ‘fastest growing app market’ in Southeast Asia as of 2017, as reported by global trade body Mobile Ecosystem Forum (Galvez, 2018). With the number of mobile phone connections exceeding the total population as of 2020 (We are Social and Hootsuite, 2020), an increasing number of activities and transactions are done through mobile applications or ‘apps’. Moreover, the Philippine market ‘can be a gold mine for app developers’ because of ‘high install growth (driven by low cost devices and cheap data plans)’ and the fact that ‘app localization is almost unnecessary’ as a significant part of the population speaks English and 40 percent of mobile internet users prefer it over the national language Filipino, according to global mobile advertising company Applift (2015).

However, although it was predicted that the app market will grow 2019 onwards, ‘expansion in value will be limited by the very slow connection speeds the current 4G network can achieve’ (p.7), according to an industry profile released by MarketLine (2017), an international publisher of business and industry information.

When it comes to using networked services through mobile phones, Filipinos spend most of their time on social media, followed by mobile messenger, entertainment and video apps, games, and shopping apps, according a 2020 report by advertising Agency We Are Social and social media management platform company Hootsuite. There is no recent empirical data on the demographics of mobile app users and which particular apps are used by which group. The available data shows that the younger population use the internet most heavily, although it does not specify whether the access is through mobile apps, desktop apps, or browser (see We are Social and Hootsuite, 2020). However, data shows that majority of the Filipinos access the internet through their smartphones (We are Social and Hootsuite, 2020).

According to a 2018 survey, the highest amount of internet usage was observed among Filipinos in the 18 to 24 age bracket (81 percent), followed by the 25 to 34 bracket (65 percent) (Flores, 2018). More recent data shows that Filipinos aged 18 to 29 are far likely to own a smartphone and use the internet at least ocassionally compared to those in the 50 plus crowd (Schumacher and Kent, 2020). From these figures, one can assume that mobile app users are mostly the younger Filipinos – or the digital natives, so to speak.

By economic strata, the ‘emerging affluent’ tend to use apps for a variety of services, such as booking transportation, more than the other socio-economic categories, based on the data from the Visa Consumer payment Attitudes survey in 2016. About 70 percent of the ‘emerging affluent’ in the sample use apps to avail of services, higher than the average 6 out of 10 for all strata.

The app ecosystem in the Philippines is diverse: Filipinos use apps for social networking, banking, movie and series streaming, deliveries, music download and streaming, transportation, mobile money, and even healthcare. Although the Philippines has been ‘slow in adopting e-wallets’ (The Nerve, 2019), more and more Filipinos are now using mobile money services offered by the telecommunication giants PLDT, Inc. (Paymaya and Smart Money) and Globe Telecom, Inc (GCash), as well as financial services platform From 2018 to 2019, the value of e-money transactions increased by 36 percent and is expected to climb further as contactless transactions are promoted amid the coronavirus crisis (Agcaoili, 2020). GCash reported a customer base of 20 million users as of 2019, while Paymaya has eight million based on the most recent available data published 2017 (Zoleta, 2019)., meanwhile, has five million users as of 2018 (The Nerve, 2019). With these figures, the number of people with e-wallet accounts accounts for 31 percent of the total population (The Nerve, 2019).

However, while the adoption of -ewallets is increasing, several barriers stand in the way of digital financial inclusion. For one, cash is still the most preferred payment method and in 2018, only two years ago, 99 percent of the local transactions were still paid by cash (The Nerve, 2019). Furthermore, while 31 percent sounds like a good number, this number is still lower than the number of e-wallet accounts in neighboring countries such as Indonesia (66 percent of the population have e-wallet accounts) and Thailand (58 percent) (The Nerve, 2019). Lack of awareness about e-money and cybersecurity remains an obstacle as well. A significant number of Filipinos do not use e-wallet because they think it is not secure, others simply do not see the need for it, while others do not know how they work, according to a 2019 survey conducted by The Nerve, a data insights company, in partnership with news firm Rappler. More than 1,700 respondents participated in the survey. Last, the adoption of e-wallets is also hindered by poor internet speeds outside especially outside the urban areas.

Barriers notwithstanding, and even without the coronavirus crisis, e-wallet transactions are still expected to grow because the character of the Philippine mobile-digital landscape is predisposed toward it: Philippines is a ‘mobile first’ market with high internet and social media penetration (The Nerve, 2019).

Especially in the urban Philippines, most Filipinos now tend to use mobile banking instead of visiting branches. According to the Visa Consumer Payment Attitudes study in 2016, nearly three in four Filipinos have a banking app on their mobile phones and 80 percent of Filipinos prefer to transact through the app instead of going to the branch. Furthermore, 65 percent have used their smartphones to make purchases and 41 percent make mobile payments at least one a week. Moreover, the number of digital payment transactions per month increased by 20 from 2013 to 2018 (Massally, Ricart, Bambawale, Totapally, and Bhandari, 2019).

Surprisingly, many Filipinos seem to be aware of cryptocurrency, but investments remain low because of perceived risk, based on a survey by the Organization for Economic Cooperation and Development (OECD) last year (de Vera, 2019). The OECD found that 74 percent of the respondents are aware of cryptocurrency but to varying extent: 27 percent said their level of awareness could be described as ‘not very well’, 20 percent ‘some extent’, and 17 percent ‘very well’ (de Vera, 2019).

The use of mobile apps for the healthcare sector is also emerging, as health maintenance companies started using apps to streamline services. PhilhealthCare,Inc., for example, introduced apps to ‘allow members to consult with doctors using smartphones, skip the long lines in waiting for medical care, produce electronic vouchers, find the nearest clinics, generate letters of authority or obtain an electronic medical prescription’ (dela Cruz, 2018).