By Yogesh Daware

THE PHILIPPINES’ financial technology (fintech) landscape is vibrant and evolving, driven by increasing digital adoption, a supportive regulatory environment, and a strong focus on financial inclusion. These encouraging dynamics form a strong foundation within the region, but profitability and sustainable unit economics remain some of the most important measures of a fintech’s success to and appeal to investors who want a clear picture of business health.

Strong profitability makes a business attractive to potential investors, and it supports the case for those contemplating an initial public offering (IPO) to fund future growth or to settle debt. Low profitability indicates that investors should be cautious because the business might not be sustainable in the long term. Investors now assess businesses on their capabilities, including whether they have built the right business model that will give them the “right to play” and “right to win,” in contrast to whether their capital will be leveraged primarily to buy accelerated growth.

One of the most effective ways for a fintech to support its profitability goals is to make sure that it has deep insights into the risk profiles of potential customers and that it has the tools to identify acceptable risks. Furthermore, being able to draw on both trended data and alternative data sources to assess consumer risk empowers fintech lenders to develop more personalized offers to consumers, rewarding their good credit behavior and building their loyalty over time.

Once an acceptable risk has been identified, the customer’s journey becomes paramount and needs to include frictionless onboarding. Responding to TransUnion’s Q1 2025 Consumer Pulse Study, 37% of Filipino consumers said they are planning to apply for a loan from a fintech firm in the next year, and 89% said that real-time approval is important for them when applying for a digital loan. Less friction during the application and onboarding processes definitely provides fintechs with one of the key levers of differentiation against competitors — especially established incumbents — and also helps drive loyalty and repeat business.

Conversely, the fintechs that don’t assess applicants’ risk profiles thoroughly are more likely to lose money on delinquencies in an environment where 45% of Filipinos surveyed expect to be unable to pay at least one of their current bills and loans in full. While many of those who said they will be unable to pay have a strategy to overcome this obstacle, including paying part of the balance due (45%), using money from savings (42%) or taking on temporary/gig work (34%), fintechs can improve their profitability by implementing robust collections and receivables strategies through data-driven decisions. These are fundamental to driving success amid rapidly evolving consumer dynamics.

One of the ways to mitigate the risk of delinquencies is to include an early warning solution that sets alerts in response to identified consumer behavior patterns. Early warnings can trigger closer engagement with consumers to offer credit education opportunities and to encourage better payment strategies.

Another way for fintechs to improve their profitability is to ensure that their environment is protected from fraud. Powerful analytics can help pinpoint irregularities in consumer-supplied data, allowing lenders to identify and prevent fraud in real time.

Steps to manage risk, prevent fraud, and create a frictionless customer experience are all important for fintechs focused on profitability. However, complying with local and international regulatory requirements is also essential. Fintechs in the Philippines must be licensed and registered with the Bangko Sentral ng Pilipinas (BSP) and the Securities and Exchange Commission. They must implement stringent anti-money laundering and counter-terrorism financing measures and comply with guidelines issued by the Insurance Commission. Careful compliance with data privacy laws and cybersecurity standards is also essential.

Trusting the guidance of a global partner that has an in-depth view into the nuances of the Philippines’ regulatory environment will reduce unnecessary expenses, avoid obstacles to success and minimize reputation risks while contributing to the profitability expected by investors and shareholders.

At a time when global financial markets are volatile and investors are likely to be more cautious, it is the fintechs that can demonstrate these fundamentals that support their profitability that will attract positive attention.

Yogesh Daware is the chief commercial officer at TransUnion Philippines.