MICROCAPITAL STORY: Philippine Telecommunications Company Globe Plans to Launch First Mobile Microfinance Banking Facility

Globe, a leading telecommunications company in the Philippines, plans to introduce a mobile microfinance banking facility in partnership with Bank of the Philippines Islands (BPI) and Ayala Corporation, a large holding company in the Philippines. This will be the Globe’s first foray into microfinance. Chairman Jaime Augusto Zobel de Ayala announced the mobile microfinance banking facility at Globe’s annual stockholders meeting as part of the company’s plan to remain focused on its core business while creating new sources of growth by tapping into adjacent sectors that allow it to leverage off the company’s resources.

Founded in 1935, Globe, also known as Globe Telecom, specializes in communication services. In its 2008 annual report, Globe reported total liabilities of PHP 33.7 million (USD 700,000) and a total assets of PHP 119.7 million (USD 2.5 million). The company has entered into a memorandum of agreement with BPI and Ayala Corp. in order to put forth the mobile micro-finance vehicle. For more details on the collaboration among Globe, BPI, and Ayala Corp, read this MicroCapital article.

In October 2004, Globe launched its Gcash program, which allows its customers to perform financial transactions like money remittance, loan settlements, disbursement of salaries or commissions, and payment of bills with their cell phones. For more on the initial deal between Consultative Group to Assist the Poor (CGAP) and Globe to create the Gcash program, please visit this MicroCapital article. The newly introduced mobile-based micro-finance banking facility will utilize the Gcash program as a delivery mechanism. Clients will be able to get or transfer money, instead of going to the bank to pick up the loan proceeds.

Globe’s new president and chief executive officer Ernest Cu states that Globe will start by offering basic financial services before offering retail micro-financing loans. He added that the facility will not be collateral-based like the traditional micro-financing facilities; instead, it will operate based more on the relationship the company will establish with its future clients.

Globe claims to be targeting the needs of the “entrepreneurial poor” with its new mobile microfinance banking facility. “[The venture] provides us with the opportunity to both grow our Gcash business and spur growth in the countryside by providing the unbanked segment of the rural economy access to credit and other financial services,” says Chairman Ayala.

By: Andrea Chu

ADDITIONAL RESOURCES

Symbiotics, April 03, 2009: “Philippines: Globe Ventures into Micro-funding”

MicroCapital Story, November 24, 2008: “Globe Telecom Establishes Partnership with and Receives 600k from Gates-funded CGAP for Mobile Banking Projects”

MicroCapital Story, November 3, 2008: “Ayala Corporation, Bank of the Philippine Islands (BPI), and Globe Telecom Announce a New Microfinance Bank in the Philippines“