GCash Continuing to Evolve into a New Kind of Social Infrastructure

—— In the first half of our roundtable discussion, we introduced the "GCash" finance super app, which has taken both the digital finance market and the Philippines by storm. In the second half of our discussion, I'd like to ask you what prompted MC to invest in this business. Can you tell our readers what led up to that decision?

Suzuki Of course. As we mentioned earlier, this is a super app that's used for everyday payments and transfers, and some 94 million Filipinos have already tried using it. That's almost 80% of the country's entire population. The spread of GCash has enabled many Filipinos who previously had difficulty opening their bank accounts to accurately keep track of their personal wealth and afforded them more opportunities to save and invest. Furthermore, the financial products offered through the platform have also helped many people acquire loans at appropriate interest rates. Previously, when citizens in the Philippines wanted to start their businesses or borrow money to pay for their children's education, the only options that many of them had were to either borrow from their relatives or take out high-interest loans from informal lenders; but GCash has changed that, and it is continuing to evolve as a new kind of social infrastructure helping improve Filipinos' quality of life. The concept of financial inclusion, or the equal access to financial services for all people, is a key to reducing poverty and closing income gaps. It also aligns with the Sustainable Development Goals (SDGs), which are 17 international targets that form the nucleus of the UN's 2030 Agenda for Sustainable Development. The growth of GCash will help realize financial inclusion, and MC recognizes just how socially significant it is to assist that growth.

—— In addition to that social significance, there is a major economic benefit to MC here as well.

Suzuki Of course. Naturally, we expect to see a very good return on this investment, but as we reap that return, the economic growth in the Philippines and further migration towards cashless payments will provide an even greater tailwind to GCash. The average age of the Philippines' citizens is about 26, so it's a young country. Plus, its GDP is expected to be the second largest in ASEAN by the year 2030. On the other hand, roughly 50% of all payments in the country are still made with cash, so there is tremendous market potential there for cashless payments. We're confident that by capturing the Philippines' outstanding economic growth and future cashless-payment wave, and at the same time working to enhance GCash services, we can help this business to grow even more in the years ahead.

—— A major Filipino conglomerate is also involved in GCash. Can you tell us a bit more about that?

Suzuki Yes, that would be Ayala Corporation. It's one of the largest conglomerates in the Philippines with a history that dates back almost 200 years. It's engaged in a wide range of businesses, including real estate, finance, communications, electric power, automobiles, and health care. MC first joined forces with Ayala Corporation in 1974, so our collaboration now spans half a century. Our two enterprises have built up an excellent partnership, with mobility and infrastructure being just two of the myriad sectors we cooperate in. One of Ayala Corporation's group companies is Globe Telecom, a telecommunications provider that also owns a stake in Globe Fintech Innovations, Inc. (“Mynt”) the parent company behind the GCash platform. When MC and Ayala Corporation were discussing several collaborations, talk came up about working together on this GCash business. One thing led to another, and eventually progressed to MC intending to subscribe to a 50% stake in AC Ventures, which also has a stake in Mynt. For MC, this investment represents a new opportunity to work with Ayala Corporation, not only on business within the Philippines, but also in the new sector of "C2B"^* finance. So we are extremely motivated to make this business an even bigger success.
^{*MC prefers the abbreviation "C2B" (consumer-to-business) over the more commonly used abbreviation "B2C" (business-to-consumer) because the former better encapsulates the idea of focusing on and starting from consumer needs.}

Exploring "Beyond-app" Collaborations

—— How will MC's investment help GCash to further evolve, and what's your outlook for this business in terms of MC's collaborations with Ayala Corporation?

Suzuki As we spoke about during the first half of our roundtable discussion, the fact that such a huge percentage of Filipinos have already downloaded GCash is due to its focus on the basic financial services for which demand is greatest in the Philippines, including cashless payments and loans. Even so, we're confident that there is still room for this GCash business to be further developed. We're in the first stage right now, during which our focus is on providing high-added value to GCash. We expect that in the future, demand will grow for an expanded lineup of services that extend beyond financial transactions and an even better user experience. Expectations as to what we can provide businesses are also quite high, and those expectations span a number of sectors and services, including our know-how in the Ponta loyalty points program and functions provided by MC Digital and other MC group companies. For example, we can create personas based on what payment histories tell us about lifestyles and personal characteristics, which will help us to develop more effective targeted advertising. We can also provide tools to help businesses analyze customers, manage inventories, wield artificial intelligence (AI) to assist with their marketing, and so on. By taking advantage of MC's know-how and expertise, we can truly enhance the value of this GCash business. During the second stage, our plan is to collaborate with GCash to leverage GCash's customer base and develop a number of new consumer-oriented businesses with Ayala Corporation.

—— So your aim is to first add new value to GCash's existing platform, and then collaborate with them to leverage its customer base, branch out and develop other kinds of businesses?

Suzuki That's right. The third stage will involve encouraging other MC business groups besides the S.L.C. Group to collaborate on new projects with Ayala Corporation. There are a lot of possibilities to explore. MC and Ayala Corporation share its vision to collaborate with GCash to promote comprehensive collaborations that are invested in economic development in the Philippines. MC has far-reaching multi-industry connections, while Ayala Corporation has a long history of developing businesses in diverse sectors throughout its homeland. We believe that our companies can use those strengths to create some very significant connections, and we're looking forward to doing just that. Now, having said all this, the first stage of our GCash mission has only just begun. Our hope is to make steady progress, one step at a time, so that we can gain a presence in the Philippines that's recognized as making a genuine and meaningful contribution to its economic growth.

Building Businesses Together: The Key is Trust

—— We see that the strengths of MC's S.L.C. Group are particularly in food and retail businesses in Japan, so I can imagine that venturing into digital finance in the Philippines might present your group with some pretty serious challenges. Has that been the case?

Matsumura Yes, it has. Our company's press release and other external communications have drawn attention to how this is the Philippines' largest digital payments app and made other impressive statements, so at first glance, it might seem like a pretty glitzy achievement (laughs). In truth though, it's been a real grind getting to this point. We've had to slog our way through a lot of tedious and difficult work. We did our due diligence regarding the investment and the business, and it was only after very careful internal consideration that we came to our final investment decision. We then commenced contract negotiations with our counterparts in the Philippines. We couldn't afford to overlook anything, but thanks to Mr. Suzuki's leadership and our strong teamwork, we were able to make steady progress. Looking back, it was a really tough road to go down, but we're now at a new start line. We've steeled ourselves for the challenges ahead and everyone's looking forward to taking them on. Nakamura MC is developing diverse businesses all over the world, including in the Philippines, where we've already made great progress in fields like infrastructure, renewable energy and motor vehicles. But even with that experience behind us, we know that C2B finance business is still an unknown sector for MC, and as we discuss our involvement in it, we do have a number of concerns, such as the extent to which Japanese expertise is really a good fit. Local market surveys and other data have given us reason to feel both apprehension and optimism about starting so much from scratch, but we're fully committed to this business and we're doing our best every single day. Suzuki One of the things that always fascinates me about working for a Shosha is that we get to be right on the front lines of our investments, where we can work hand in hand with our local partners and colleagues to develop the businesses. Many kinds of personal relationships and business models will naturally be born on those front lines, so I've always made it my top priority to earn the trust of whomever I encounter there, regardless of the country or business in question. So the question is, how do we earn that trust? Personally, I think the only way is to think and work harder than anyone else for the success of the business. Earlier I mentioned how we've been doing business with Ayala Corporation for half a century, but that relationship is entirely due to the mutual trust built up by our predecessors. My aim is to help strengthen those bonds even more, and I think it will be my efforts from hereon that determine whether or not I achieve that aim. MC invests in a lot of different businesses, but it's been a long time since we've made a commitment as large as this in a brand-new field. I'm feeling huge expectations and pressure from all sides right now (laughs), but I'm determined to keep doing my best.

Helping to Create the Next Generation's "New Normal" in Business

—— To conclude our roundtable discussion, I'd like to ask each of you to talk a bit more about your professional aspirations and dreams for the future.

Nakamura When I started working, I did so with an ambition to support Japan's growth, but this GCash business has gifted me with a tremendous sense of reward and responsibility because it's an opportunity to contribute to growth outside of Japan as well, namely that in the Philippines. Even though finance business changes with the times, I think it's the desire to help people take on challenges that drives those engaged in it, and that's something I think will never change. Banks lend money and insurance companies provide protection that help both people and companies to cope with the risks that are inherent to taking on new challenges. This project has reminded me how essential that support is to a country's growth. Matsumura I'm a mid-career recruit at MC. I used to work for a cosmetics company, where I was in charge of digital marketing and digital transformations (DX). This GCash project is very exciting because it allows us to make use of data to improve lives and the in-app customer experience to meet the needs of Filipinos.
Digital payments are not the sort of things that take place once every few months. These transactions occur every single day, so the data are always very regular and up to date. Those data also very diverse, covering many kinds of products and businesses, and although using them effectively to create new businesses will come with challenges, it will also come with rewards. Of course, it is important to note that we can do all this while maintaining the data privacy of users and strictly complying with relevant regulations. At one time, many of the services that we today take for granted didn't even exist, and I think it would be cool to create new services that are similarly accepted as the new normal by future generations. Personally, I'd like our descendants to live in a better and more prosperous world than the one we live in today. To help make that possible, I'm determined to give every one of my jobs my best effort possible, and that starts with this project dedicated to enriching Filipino society.

Suzuki I joined MC wanting to create new businesses, and it wasn't long before the opportunities to do so started coming thick and fast (laughs). I've been involved in the launch of the Ponta points program, a venture-capital business in the US, Lawson Bank, a health care venture, and so on. My work has put me on the front lines of so many different businesses. The reason I enjoy developing businesses is that as long as their products and services deliver value and significance to society, they will always survive and continue to deliver that value. In other words, they will always be relevant because they support the lives of those who work for them and use their wares. GCash certainly has the potential to grow into that kind of business, and in that respect I think it's a very significant one. Japan is in a period of low growth and dealing with a low birthrate and aging population, but we have the asset diversity one would expect in a mature country. By acting as a bridge between Japan and the Philippines, which is enjoying remarkable economic progress, MC can help both our nations to supplement and support one another's growth. That's the bright vision of the future that compels me to give my best every day.