Formulation of Strategic Plan for a Financial Technology Startup Company

This study formulated a strategic plan for a financial technology start-up company in the Philippines. The business model involves selling airtime prepaid loads and mobile top-ups, channel and medium for various remittance and financial institutions, and Artificial Intelligence (AI) capable system that gives assistance and basis to its users for granting of loans. The FinTech industry is a fast-emerging industry in the county. The Philippine government pushes and backing up the financial inclusion and digitization programs aiming to simplify and bring ease and convenience of doing business which brings stiff competition among FinTech companies. The emerging market and stiff competitors can bring disadvantage position, thus strengthening marketing initiative campaign will be the best strategy for the company. Based on the strategic management tools and gathered data, market penetration will be the best strategy for the FinTech company to sustain performance. The marketing campaigns and use online social media platforms must be utilized to do promotions and advertisements. Specific action plans to achieve the company’s objective is to create social media accounts and increase its presence on all social media platforms. The creation of short audio-visual presentations and videos will inform, and educate the targeted market about the company, and its product and services. The videos will be also used to inform the market about the importance and advantage of doing online transactions. The implementation of the strategies and program plans is expected to bring a FinTech company to a better position and can be the leading and most trusted financial solution providers in the country.


Introduction
Financial Technology, otherwise known as fintech, is an emerging industry brought about by the innovation in technology. It is considered as the most important innovation in the financial industry in the recent year. According to KPMG India (2016), there were more than 12,000 start-ups and massive global investment of USD 19 billion in fintech industry in the year 2015 alone. Lee and Shin (2017) describes this new landscape as a promise in reshaping the financial industry through cost-cutting, improving services and offering diverse products and services. With the easy access to technology, fintech opens a wide range of opportunities for startup companies by providing financial solutions using the internet (Milian et al., 2019;Gabor & Brooks, 2017;Alt et al., 2018;Gomber et al., 2018) in the form of trading, lending and asset management (Gomber et al., 2018;Alt et al., 2018;Lee & Shin, 2017).
There has been a phenomenal growth in fintech investment within the last decade. For example, the first quarter of 2016 saw an increase of 67% to reach $5.3 billion in ventures (Accenture, 2016). According to Statista (2023), investments into fintech companies reached $216.8 billion from 2010 to 2019, dropped below $125 billion in 2020 and increased to almost $239 billion in 2021. Although the pandemic period was a slow year for fintech, it opened opportunities for small and medium enterprises through the use of technology. With the threat of fintech competition in the past that 83% of financial institutions believed at risk to fintech startups (PwC, 2016), to opening significant impact on the financial industry and opening more doors for entrepreneurial undertakings. Fintech is touted as a game changing, disruptive Asia-Pacific Economic Cooperation, 2022;Haddad & Hornuf, 2023;Anifa et al., 2022;Bittini, 2022;Gimpel & Röglinger, 2018;Wang, 2022;Siddiqui & Rivera, 2022), there is absence of evaluating the fintech industry for the purpose of formulating a strategic plan for potential fintech startup company. Hence, this study formulated a comprehensive strategic plan for a potential fintech startup company. This study followed a three-stage approach including external analysis, industry and competitor analysis and case study of an existing fintech company.

Methodology
This research used the combination of exploratory and descriptive research designs.
Exploratory research design discovered ideas and insights to better understand the existing business policies, processes, and guidelines to come up with a doable recommendation or solution to improve business performance. The descriptive research design was used for the better and clear specification of the business.
The development of this paper were based on several facts and information obtained primarily through public and private sources. Accessing various websites was done to get the essential and needed information and data such as Anti-Money Laundering Council (AMLC) (www.amlc.gov.ph); Association of Remittance Company Compliance Officers (ARCCO) (www.arcco.com.ph); Ayannah Business Solutions Inc. (ABSI) (www.ayannah.com); Bangko Sentral ng Pilipinas (BSP) (www.bsp.gov.ph); FinTech Philippines Association (www.fintechph.org); and Securities and Exchange Commission (SEC) ( www.sec.gov.ph).
The study used three-stage approach to formulate a comprehensive strategic plan. The first stage is the external analysis, which identified all the important external factors contributing to the success or failure of any fintech startup company. The second stage is the industry and competitor analysis that provided a comprehensive framework of the industry market as foundation of the strategic actions. The last stage is the case study of an existing fintech company as basis of the comprehensive SWOT and financial analysis. The financial reports are anchored on the case study of an existing fintech company.
There were several methods and tools used to gather information and to evaluate the business processes, data, and information. The summary of the tools and activities used was summarized in the table: As basis of the case study, the selected sample company (X Company) provides an online platform that offers business solutions with various products and services to tap the huge market. The advancement of technology leveraged the company to develop an interoperable system to cater to various products and services for a specific target market. The targeted market was the unbanked and financially marginalized communities in the Philippines to offer four (4) major products and services: Sendah Direct, a secure, reliable, and scalable Kaya Credit, the Philippines' first credit scoring service that uses artificial intelligence to incorporate behavioral data that will give aid and assistance in decision making.
In practicing the Data Privacy Act of 2012, proper notice and requests were made and discussed with an existing fintech company. Other sources used were publicly available on government offices and agencies and over the internet.

External Analysis a. Philippine Regional Economic Growth
National Capital Region (NCR), and Central Luzon (Region 3), which account for nearly twothirds of the Philippine domestic production. NCR had the largest share of GDP at 37.9 percent in 2015, followed by CALABARZON at 15.5 percent, and Central Luzon at 8.9 percent, for a combined total share of 62.3 percent. The growth of these regions has been due primarily to the location of the central government, which facilitates the expansion of the industry and services sectors (NEDA, 2017). The government aims to decongest NCR and direct growth to key centers throughout the country, where the benefits of agglomeration can have greater potentials of being realized.
It recognizes the comparative advantages of cities and municipalities and seeks to address spatial and socioeconomic inequalities by linking lagging regions with leading ones, rather than advocating the uniform dispersal of development, which can create diseconomies and inefficiencies.
Significance: The decongestion of NCR and other key locations for economic activities will mean the building of different infrastructures including telecommunication, diversion of investors, creation of employment, and rise of micro and small enterprises in those areas. It will be an opportunity for the company to do business and reach more clients. The creation of different infrastructures like roads and telecommunication lines will expedite the market penetration, thus it will create a higher opportunity and a higher income.

b. Bayanihan Act to Recover as One (BARO)
NEDA reported by almost half (45%) of the unbanked. Other reasons they reported were the perceived lack of need for an account and the lack of documentary requirements. They also noted that the perceived lack of need for an account may be linked to the lack of awareness that an account can be a tool for convenient digital payments. This comes even as over 80% of the unbanked have various payment transactions such as receiving benefits and wages, as well as paying fees, which they do primarily in cash (Adrian, 2020).

Significance:
The high number of unbanked Filipinos having various reasons for not having a bank account is the primary targeted market of ABSI. Those high unbanked will be an opportunity for ABSI to expand and widen its reach to cater to the untapped market.
The Millennial Impact. The Philippines alone has approximately 28 million millennials (based on Comelec's voters' data in 2015), with a median age of 23. Many economists believe that this puts the country at an advantage. The entrance of the millennial into the local workforce has already started boosting the country's productivity and the sustainability of the current economic growth will be highly affected by this (KMC Solutions, 2020).
Significance: Millennials are persons reaching young adulthood in the early 21 st century that was born from 1981 to 1996 aging from 24 to 39 years old as of 2020. This age group is the computer literate and tech-savvy who can easily adapt to technological advancement and developments that include online financial transactions. An opportunity for the company to easily convince clients about the advantage of being online that will eventually be converted to income (Vogels, 2019).

Significance:
The AmBisyon Natin 2040 is the President's plan for Philippine development, aiming for a better economy. Its direction is to create government interventions to achieve the development plans, with the AmBisyon Natin 2040. It will encourage more investors to invest in the country, the building of various infrastructures, and the creation of jobs and employment. The projects and programs in the AmBisyon Natin 2040 will be beneficial and an opportunity for the company because the creation of employment will induce the financial capabilities of the client and increase the financial services as well.

Digital Transformation. The Bangko Sentral ng Pilipinas (BSP) has unveiled it is
Digital Payments Transformation Roadmap 2020-2023, which charts the central bank's current initiatives and strategy in advancing a digital payment ecosystem. The roadmap, which aims to meet the needs and capabilities of individuals and firms, identifies two key strategic objectives, first is the strengthening of customer preference for digital payments by converting 50% of the total volume of retail payments into digital form and expanding the number of the financially included to 70% of Filipino adults by onboarding them to the formal financial system through the use of payment or transaction accounts. The second is the availability of more innovative digital financial products and services designed to be responsive to the needs of consumers, enabled by a digital ID (Philippine Identification System or PhilSys), and supported by the availability of a next-generation payment and settlement system to facilitate real-time processing of financial transactions (NewBytes.PH, 2020).

Significance:
The Digital transformation of doing business from the traditional face to face to a more convenient way of online and app-based financial transactions and solutions will push the business owners and their patrons to access online platforms. This BSP initiative for the advancement of the digital payments ecosystem will be beneficial for those industries in the financial and technology as it will be easier for FinTech companies to push their products and services to the market and clients. This will be an advantage and an opportunity for ABSI to partner with business owners to be financially online. Since this is a BSP initiative the company can also partner with the BSP in educating and informing the public about the importance of doing business online.

h. Ecological aspects
Climate Change. The Philippines is prone to both geological and hydrometeorological hazards. The frequency and severity of these hazards, climate change, and their impact are expected to increase. Thus, the Philippines ranks third among the countries with the highest disaster risk in the world, after Vanuatu (1st) and Tonga (2nd) Significance: The effect of climate is changing and the increasing temperature will result in severe weather conditions, stronger rains, storms, and typhoons to a more humid environment up to extreme heatwaves. These weather conditions are greatly felt and experienced by the country as the Philippines are exposed to geological and hydro-meteorological hazards. This will affect the traditional way of doing the financial businesses and transactions via face to face or needs physical presence of the client. The extreme weather conditions will also affect the accessibility to those physical business locations and offices since public transportation is limited during those situations. This will be an opportunity for the company opportunity because people will tend to stay at home and access online platforms and applications to do their transactions that will eventually increase transactions and sales.
FinTech Bring Environmental Accountability. Barbieri (2019) cited that the environmental concerns are an increasingly important issue for people around the world. From cutting back on the amount of plastic being used to taking public transport wherever possible, there has been a fundamental shift towards more green-conscious habits in many parts of society. Consumers have also come to expect the same standards from businesses, with 81% of people across the globe saying that it is the responsibility of companies to help improve the environment. Consumers enjoy the knowledge of being able to observe and manage their carbon footprint, while manufacturers can show off their sustainability credentials and benefit from any radiant upswing in purchases three quarters (73%) of Millennials say they are willing to pay more for sustainable goods (Vogels, 2019).

Significance:
The increasing consumer awareness for reducing carbon footprints will mean a shift to a greener option for doing business. The realization of the consumer to greenconscious habits will create a shift to technological-based processes that includes online transactions. This shift of consumer to a greener option of doing business will be an opportunity with ABSI since the company is engaged in FinTech business. This will lower the cost of doing the business physical offices and stores will not be needed anymore and production costs for cards and other tangible collaterals will not be needed anymore. The lowering of operational costs will increase company profitability.

Industry and Competitor Analysis a. Industry Analysis
Philippine FinTech Industry. Gimenez (2020)   Dumlao-Abadilla (2020) exposed that the transaction value of the FinTech market is expected to grow at an annual rate of 16.4 percent to reach $10.5 billion by 2022, from $5.7 billion in 2018.
FinTech Cyber Security and Stability. According to Walker (2020), the digitalization of financial institutions might concern most consumers because technology has not been known to be 100% reliable. The threats that most people were concerned about were identity theft, money laundering, and espionage. Cybercriminals have preyed on the little guys which are smaller banking firms because they were known as companies that do not invest much insecurity. There are more efforts to build awareness on the importance of safety, especially in FinTech companies. More FinTech companies will be educated about how they can secure their business operations and survive a cyber attack. Part of their education includes being proactive in their security system planning but also includes a reactive strategy (www.fintechweekly.com). appear in more than one (1) category to better reflect the nature of the business, but they still count as one towards the total.  In August, the firm partnered with the Bureau of Internal Revenue to extend the agency's tax payment services to mobile.

3RUWHU ¶V )LYH ) Forces Analysis
)LJXUH VKRZV WKH 3RUWHU ¶V )LYH )RUFHV $QDO\VLV WKDW HYDOXDWHV WKH WKUHDWV RI QHZ entrants, bargaining power of buyers, threats of product substitute and bargaining power of suppliers. sustainable economic growth ´ $FFRUGLQJ WR 6HFWLRQ $UWLFOH ;,9 RI WKH &RQVWLWXWLRQ recognizes science and technology as "essential for national development and progress" and gives priority to research and development, invention, innovation, and their utilization.
Under R.A. 11293, Section 25 Innovation Alliances the NIC shall establish the necessary conditions and framework that will promote the establishment of Innovation Alliances. Such a framework should encourage companies to engage in collaborative research consortia among private sector entities and with academic or educational institutions. This framework shall also facilitate regional networking and alliances to promote knowledge and technology sharing as well as collaboration in innovation projects (www.lawphil.net).

1HZ HQWUDQWV ¶ SUREDELOLW\ WR JDLQ FXVWRPHU OR\DOW\ ± LOW
KPMG (2019) discovered from a survey to18,520 consumers from more than 20 countries explores the truth about customer loyalty and how brands and retailers can attract and retain customer loyalty through enhancing customer loyalty programs. Customer loyalty is alive and well, but digital disruption and new generational influences show that the nature of loyalty is changing. Overall, only 37 percent of respondents identified points and rewards as one of the most effective ways to secure their brand loyalty. In almost every country, points and rewards were less likely to earn loyalty than corporate transparency and honesty. Customer loyalty is too critical to be left to a customer loyalty program. When a customer is loyal to a brand 86% will recommend the company to their friends and families, 66% are likely to write a positive online review after a good experience, and 46% will remain loyal even after a bad experience.

Large capital requirements ± MODERATE
General Capitalization-LOW. The general minimum capital requirement when registering a FinTech company in the Philippines is PHP10, 000,000 (Emerub, 2018).  .

Engage in Electronic Money
Under Section 24 of RA11293, the National Innovation Council (NIC) and its member government agencies shall eliminate regulatory barriers to innovation and cut red tape to boost innovation efforts. Towards this end, the NIC shall facilitate consultations with stakeholders to identify and cause the removal of barriers in accelerating innovation efforts, such as procurement rules and regulations, and to align efforts and enhance collaboration (Law Phil Project, 2019).

Number of Customers-HIGH
The Philippines has a population of over 100 million people, with 71% being active internet users and most of them have mobile subscriptions. With the internet penetration rate of the country at 73%, this makes it a suitable breeding ground for the latest technology to be introduced and tested (Emerging, Fintech, n.d.).

Strategy Formulation
For the purpose of analysis, the strategy formulation and financial projections are based on the HYDOXDWLRQ RI WKH ; &RPSDQ\ RSHUDWLRQV ,W VKRXOG EH QRWHG WKDW WKH FRPSDQ\ ¶V PDUNHW are unbanked and financially marginalized communities in the Philippines accounting for 77% of Filipino adults with no bank accounts (de Guzman, 2018) estimated to be 15.8 million (Financial Inclusion Survey, 2017). In addition, the company provides an online platform that offers business solutions with four (4) major products and services. The company partners with local pawnshops, traditional remittance companies, new online remittance companies and leading remittance centers.

Strengths, Weaknesses, Opportunities, and Threats (SWOT)
The identified strengths, weaknesses, opportunities, and threats based on the assessment of the company and to the business environment shows that the company has a lot of opportunities. Eight out of nine (8/9) opportunities identified were government-initiated or mandated, thus, it is feasible and most likely to happen in the coming years. The company must create necessary and immediate programs to grab such opportunities. The system and the platform is the strength of the company. Capitalizing the company's system will be a great advantage. The company should also take into major consideration to address the noted weaknesses and threats, covering the marketing initiatives and security issues. Using the SWOT matrix, the identified company's strengths, weaknesses, opportunities, and threats are matched and streamlined to help the company come up with workable strategies that will improve the company's overall performance and position in the FinTech industry. The matched or combined quadrant is as follows: x SO. The strategies on this quadrant focuses on how to capitalize on the identified strength of the company and use this to take advantage of the opportunities. The 68 | International Journal of Academe and Industry Research, Volume 4 Issue 1 greatest strength of the company that was identified is the system, a marketing campaign to sell, introduced the products and services of the company as a platform and channel for the implementation of the government projects. The campaign shall focus on highlighting the effect of the improvements on the government projects, more especially to the government and BSP direction of digital transformation. The campaign shall also give the importance and advantage of online transactions.
x WO. Strategies on this quadrant will focus on taking advantage of the opportunities by addressing the identified weaknesses. The redirection of the marketing initiatives and additional marketing personnel to strengthen the marketing campaign. The marketing campaign will focus on advertisement and promotion using social media platforms.
This will also address the increasing losses, factoring in the marketing campaigns for the noted government projects. Programs for the lack of key alternatives will be handled by the Human Resource Department by appointing key alternates as part of the business continuity plan.
x ST. Addressing the threats with the identified strengths shall consist of a marketing campaign for financial literacy, education, and security. Changing the Filipino mindset that doing an online transaction is safe and very convenient highlighting that the system is a user-friendly one and an award-winning system. The noted threat on the personnel handling the government-mandated position and post for AMLA and Compliance task will be handled by HRD in appointing and nominating one.
x WT. A campaign strategy that will inform the public on the safety and reliability of the products and services is the company's top priority. Regular reminder updates on the security and advantage of doing business online will be the key strategy for this quadrant.
The analysis shows that improvement in the Marketing department and its campaign will be the key to the improvement of the overall performance of the business. The company can improve its performance by redirecting the marketing efforts and hiring additional marketing staff to handle the marketing redirections. Market development and penetration will be the best strategy for the company factoring in the SWOT analysis. Information and educational campaigns must take into consideration. Product development can also help the company to increase its reach by improving its products and services. New company should grab this opportunity to have a bigger and wider reach all across the Philippines. The entry of the "third Telco" will create a new untapped market, thus new company can utilize such to cater to that emerging market. It can also create a system to cater to the small and local enterprises.
Product Development. The marketing strategy will increase sales by improving the existing product or service being offered. The technologically based business is fast-evolving, the urge and needs to improve is mandatory, or else the business cannot survive. The new company can start with the top-up and airtime load, and the system and platform, which can run via a web tool using the computer and the internet. Improving the product and service by developing a mobile application that can be operated on any smart mobile devices can be an advantage.

Strategy Implementation
Action Plan and Programs. Startup company must synchronize its programs to attain the objectives, mission, and vision of the company. The marketing team will be the lead department that can attain the company's goals, hand in hand, and with collaborative efforts to other departments.

| International Journal of Academe and Industry Research, Volume 4 Issue 1
Marketing. The marketing strategies will focus on improving marketing programs to increase sales. The company's marketing department must focus on improving the awareness campaign to fulfill the objectives set. Online web and social media platforms will be used as a channel in making the campaign. It has the least cost comparing with the traditional marketing channels giving an advantage for the company.
Human Resource. The company's Human Resource (HR) will focus on addressing issues on personnel. Supplying the needed manpower and appointing the mandatory positions as one of the identified threats. The HR will also lead the programs to uplift the lives of employees through training.
Business Development. The Business Development (BD) will focus on acquiring partners and partner-clients. The BD will work for hand in hand with the marketing department in achieving the company's goal.
Engineering. The Engineering as the main department deals with the company's system and platforms. Engineering will lead the programs to address the cybersecurity issues.
This will also collaborate with the Marketing and Product Development to make new and system adjustments.

Financial Projection
For   Liquidity. Data shows that the current ratio has significantly improved and can be managed to pay for their current liabilities. It also implies that the company can pay its liabilities with its short-term assets. The compDQ\ ¶V TXLFN UDWLR DOVR LQFUHDVHG and improved the previously noted liquidity concern was already been addressed.
Leverage. The equity continuously increases year-on-year as reflected in the figure, which indicates that the company is already financing its operations from its assets. The company was using less debt to finance its assets, resulting in a lower risk for the company.
Activity. The company is continuously doing great on managing its inventory, with the pre-IXQGHG V\VWHP EHLQJ LPSOHPHQWHG 7KH FRPSDQ\ ¶V DVVHW WXUQRYHU UDWLRV DUH FRQWLQXRXVO\ increasing, this is a sign that the company is managing its assets well and efficiently using them to generate sales.  The 3-year projected financial performance indicates that the marketing strategies implemented are all working. The strategy on marketing penetration requires a dedication budget of an 8% increase based on the last years operating expenses. Marketing requires a little budget since it will utilize social media that is free to advertise. The program budgets and expenses were factored in the operating expenses. Following years will have a budget of at least 30% increase factoring in a more extensive marketing campaign involving incentives and audio-visuals. Following the plan and all interventions, the financial objective will be attained with including the projected increase year-on-year. The horizontal analysis of the Statement of Financial Performance shows that the financial objective set of increasing revenue by 30% year-over-year was achieved. The significant increase in the operating expenses especially on the advertising and promotions was due to the implementation of the marketing programs for the said years. Likewise, the expense increase in seminar and workshops were due to the implementation of programs from the Human Resource for AMLA training that will be a yearly activity.
The 3-year projected statement of financial position expresses a stable increase in total assets. The company will become liquid because of the implementation of the pre-fund system and the nature of the business in dealing with airtime loads, and commission-based remittance 74 | International Journal of Academe and Industry Research, Volume 4 Issue 1 transactions. The company's inventories will continue to increase as part of the marketing and business development intervention and programs. The non-current asset will remain the same since the nature of business is more technology and systems development. Through the marketing programs the company will continuously increase its assets and the stakeholders will expect a better return on their investments. The horizontal analysis of the statement of financial position confirms that the company is continuously improving as a result of the implementation of programs and action plans. A significant increase was seen on the current accounts, both for assets and liabilities. The

Conclusion
The Philippine market has a lot of potentials based on an industry analysis conducted with a lot of untapped and underserved market in a population of over 100 million and 71% active internet users. A new fintech startup venture is feasible following the government interventions of pushing to an online econRP\ DV EDFNHG XS E\ WKH %63 ¶V XQYHLOLQJ RI WKH Digital Payments Transformation Roadmap 2020-2023, which charts the central bank's current initiatives and strategy in advancing the digital payments ecosystem. Similarly, the approval of the third TELCO franchise is beneficial for the industry.
The fintech industry is a promising one, despite the results of Porter's five forces model.

7KH 3KLOLSSLQHV ¶ fintech ecosystem is brimming innovation with a vibrant mix of entrepreneurs
attempting to fill in the gap within the financial system. Despite the strides that the country has made in this space, the 3KLOLSSLQHV ¶ QDUUDWLYH KDV RIWHQ EHHQ RYHUORRNHG E\ LQWHUQDWLRQDO PHGLD when examining financial innovations. In addition, the identified external and internal forces that are affecting the fintech industry in the county serve as tools to have better performance results. For any new start-up company, the programs covering minimal investment or expenses but with a desired return are manageable.