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MASSACHUSETTS INSTITUTE OF TECHNOLOGY Legatum Center for Development & Entrepreneurship

Entrepreneurs

The Legatum Center supports entrepreneurs all around the world through the Fellowships and Grants

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Send Friend

2017 - 2017
Seed Grantee
Sector:
Financial Services
Location:
Philippines

David Lighton, a 2018 MBA candidate, has completed a second Legatum Center Seed Grant funded trip to the Philippines to conduct market research and build partnerships for Send Friend, a company that offers remittance services between the U.S. and the Philippines. In June 2017, Banti Gheneti, SB 2017, joined the Send Friend team and traveled to the Philippines.

Blog Post

July 12, 2017

David Lighton and Banti Gheneti used their Legatum seed grant to travel to Manila conduct further research on the evolving but fragmented fintech ecosystem in the Philippines, to advance their venture, SendFriend. Rather than to study the customer explicitly like on the January 2017 trip, this excursion’s goal was to build partnerships. Seeking referrals from within the MIT Asia community, the team was able to create prospective partnerships with two exciting fintech firms, which will serve the minimum viable product release in August. 

The team was also able to meet with the fintech liaisons for the two biggest banks in the Philippines, BDO and BPI. Both of these banks cited that they would like to partner with fintech firms wherever possible, as they anticipate their own remittance businesses will be disrupted by innovation in Asia within the space. Both banks said they have APIs for bills payment which either have not been launched or were recently launched but do not yet operate at scale. These will give connectivity for international bills payment, an exciting space, not yet mature in the Philippines market. Both banks agreed to partnerships in the future provided SendFriend can meet net worth and regulatory requirements for SME accounts, set by both the government and the banks themselves.  

 

Blog Post

February 5, 2017

An exciting new insight was revealed a few times during my three weeks in the Philippines, researching the country’s massive – and increasingly hotly contested – remittances corridor, valued annually at about $30 billion.

Successful investor and MIT Sloan alumnus Javier Infante raised the issue, which was later echoed by a few startup founders in fintech:

Of these transfers, which account for roughly 10 percent of Philippine GDP, a large share (believed to be between 10 and 20 percent) is allocated toward unintended uses. These include alcohol, gambling and prostitution, among others, even though remittances, sent predominantly by overseas Filipino workers (OFWs), are intended to pay mostly for food, rent, health, and education costs.

While this spending pattern can be understood as a negative externality or as an effective “tax” on money transfers, it presents a promising opportunity for social impact startups:

New financial technologies for in-kind remittances, or more simply, for payments from remittance senders directly to education, healthcare, and real estate providers in the Philippines would create powerful new efficiencies with the right partners.

If all those funds were reallocated to their intended functions, that would mean an increase between $3 and $6 billion in annual outlays on food, rent, education, and health – not counting the possible increases in flows when senders see their money is being spent in the right places.

I am continuing outreach efforts to NGOs, especially in the education space to seek access to their network of partner schools, and to further explore the exciting possibilities of cross-border bill-pay, in a country where a very small share of remittances (<10 percent) are already digital, despite the Philippines’ as the third largest remittances market on earth and a high (6 percent) growth rate.

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